September 27, 2022

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80% increase in demand for substitutes to meet price rise

80% increase in demand for substitutes to meet price rise

Inquiry: Yamama Padwan
In light of high prices due to global causes, several key traders and suppliers confirmed that the state market is witnessing significant demand for sourcing of substitutes for international brands, especially in food products, at a rate of 80%. The main ones are inflation, shipping and petroleum, and with no difference, quality makes no difference to consumers.

They told “Al-Khaleej” that they are always looking for alternative markets, even though some products have stocks for 6 months to a whole year. Substitutes also market themselves as long as they are of high quality, competing with other high-priced European products.

The same holds true for retail market experts and economists, who expect demand for substitutes to increase in the coming period.

Hossam Rasheed, legal adviser at the Central Vegetable and Fruit Suppliers Group in Al Awir, said large traders have annual contracts with international shipping companies, which contribute to price stability throughout the duration of the contract, but small traders suffer from high inventories. Prices, due to lack of long-term contracts. .

Key suppliers have strategic stocks of vegetables and fruits, which are sufficient for 6 months to the whole year for apples, and 6 months for potatoes and oranges, as the demand for their products does not decrease. Substitutes cannot be distributed as they market themselves unless they are of a high quality that competes with other high-priced European products, among the staples in every household.

Rashid said the percentage of demand for substitutes has risen to 80%, and traders have offered high-quality substitutes from Iranian markets at competitive prices compared to products from Jordan, Syria and Egypt, which are being distributed. All outlets in the country including tomatoes, cucumbers, eggplant and cabbage. Pepper, watermelon and melon.

Difficulty in choosing

Walid Al-Maghrabi, director of procurement at the Emirates Cooperative in Dubai, explained that around 300 types of basic and consumer goods are available with the slogan “Cooperation”, which is one of the options available to consumers in the spotlight. Prices, especially it is characterized by the competitive quality of products with international brands, rather, it comes from the culture of buying national products.

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The advantage of alternatives is that when the consumer makes his purchase decision, they provide more options, because there are at least two or more products that can be used for the same purpose, and then the consumer can make a difference when he makes the purchase decision, which requires effort from him. In market research, in light of multiple outlets and partnerships, and a large number of attractive offers. Additionally, giving consumers more choices helps create a more competitive market.

Al-Maghrabi pointed out that some consumers find it difficult to choose substitutes, especially if one of them is used to a certain level of the product’s quality, and that there are many reasons behind the difficulty in choosing a product, including consumers. Apart from having high culture and awareness, comparing the characteristics and benefits of the alternative product as opposed to the product he is buying, he can identify his needs and buying tendencies.

spreads

The same applies to Farid Ali Al-Shamandi, a prominent supplier in Dubai, who explained that in light of the country’s open and competitive market advantage, most consumers are looking for alternatives to food items and vegetables. At the consumer first place, the price differences between universal and alternative brand products, which are at least 20 to 30%, while the quality between them is similar, increases the demand for them. Currently more than 50% make no difference to the consumer without a difference in quality.

He said that traders are finding it difficult to find substitutes for daily commodities, especially vegetables and fruits, according to the different seasons of the exporting countries, but traders should be aware of the seasonality of packaged goods and items that last for several months. Countries by priority of goods.

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The weakest link

As for market experts, Ibrahim Al-Bahr explained the importance of replacing basic purchases with luxuries in every household, looking for alternatives to face rising prices, especially since consumers are the weakest link in the global inflation equation. It provides solutions that satisfy the low income population, especially as the state market is rich in variety of products.

There is no mistake in buying from multiple outlets, but he calls for distributing a shopping basket with the lowest price for each item, which saves him money. Outlets and cooperatives attract buying hands, the consumer’s loyalty is in his pocket.Primarily, not to a particular store, especially if it is near his home or gives him more points for each shopping process.

He pointed out that the quality of similar products usually varies, but that doesn’t mean they aren’t among the options for consumers in the face of flaring prices, mainly due to inflation and global oil prices. . Marketers should also find more alternatives for products that create strong competition to gain consumer trust and increase the number of promotional campaigns launched by outlets in the interests of both the seller and the consumer.

Fringe benefits

Meanwhile, Associate Professor of Economics and Head of the Department of Economics at the United Arab Emirates University in Al Ain, Dr. Osama Sweden expects demand for alternative products to rise in the next phase, a key indicator of consumer engagement. In priority, but the success of this matter depends on providing appropriate information to consumers about alternative products, because communication platforms and their applications play an important role in speeding up the order of priorities.

He explained the importance of moving toward necessities and away from luxuries or luxuries, while using the philosophy of reducing or increasing (equalizing) the amount of purchases of goods to raise or alter what are called marginal benefits to the consumer. Inflation may be accompanied by a fall in the prices of some local or substitute goods, especially since much of the world’s current inflation is imported.

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Increase confidence

Regarding the means of promoting a culture of alternative products to consumers, Sweden said: These products may be of low quality and are easy and low-cost solutions to protect the family and society in times of high inflation. It stems from the scientifically proven economic philosophy that individuals should work to maximize their utility (and not their level of consumption) within a limited or disposable income.

He said: When an economic shock such as inflation occurs, it is expected that the consumer demand for substitutes will cause discomfort to companies that produce international brands and cut prices. Reviewing their production costs and profit margins, otherwise they may lose part of the market share if they do not succumb to the shock.

Achieving competitiveness

Christophe Orset, Commercial and Operations Head of Carrefour UAE at Majid Al Futtaim Retail, confirmed that on average, Carrefour’s own brand-name products are 20% cheaper than international brands of similar quality. , focusing on product quality as opposed to marketing and distribution, we have over 3,500 food, cosmetic, cleaning and non-food products.

He said: “During the process of making our products, we constantly carry out quality control and taste tests to ensure that we always achieve high standards. To control the safety and quality of our products, these fundamental pillars cannot be compromised. Testing program by food and safety experts, tests are conducted on a regular basis for Carrefour’s own products, and regular tests are conducted by third parties to ensure these products are safe and legal.