Following the government's announcement to scrap commercial agencies for specific food products on Sunday, major retailers in the country have said that it's still early to predict how such a decision would impact the local market if it's put into effect. "First, we need to define what falls under the basic food products category," said Bejoy Pulicken, Marketing and New Initiative Manager at Abu Dhabi Cooperative Society.
"My understanding is they fall under commodities and the pricing of commodities is the result of demand and supply. So there's not much we can do about regulating these commodities," he told Gulf News.
It's a distribution business, he explained, since retailers do not have any exclusive rights on any products they sell.
"With respect to packaged FMCG food products, manufacturers are represented by exclusive distributors. If exclusive agencies are scrapped and brand owners can be represented by multiple distributors then there will definitely be more competition in the market giving a better pricing which will benefit the end user," Pulicken said.
M.A. Yousuf Ali, Managing Director of EMKE and Lulu Group, said he welcomed this "bold" step by the UAE Cabinet. "This will surely help us retailers to find alternate sources of imports to bring in products at a more competitive cost," he said in a written comment to Gulf News.
"This move will also beef up the competition and that will surely bring down costs, which will be a big boon to the residents here. The retailers are the last link the supply chain and there is little they on their own can do to reduce price unless the suppliers and/or the manufacturers also co-operate. With this ‘freeing up' of the market I can see better co-operation between the different stake holders in the supply chain resulting in better price and more option for the shoppers," he said.