Days of the big fish

By Mona El Fiqi
During any important religious holiday, when gatherings among friends and family increase, the impact of the occasion on the economy, though often significant, tends not to be uppermost in people's thoughts. But Ramadan this year, following a period of considerable changes in the way food is sold in Egypt and coming amidst a recession, has made even more waves in the economy than usual, forcing people to take note.
Although Ramadan is a month of fasting -- which might give the impression that people eat less than usual -- the consumption of food commodities during this period tends to increase dramatically. This occurs because the main meal of the day at which the fast is broken, the iftar, is traditionally a large spread for those who can afford it. And in spite of the recession, this year was no exception to the typical patterns of consumption, as people flocked to the stores buying some commodities in bulk -- a noticeable change from patterns of measured spending by most households earlier in the year.
Abdel-Alim Nawara, chairman of the Cairo Chamber of Commerce, says that the increase in food purchases during Ramadan relates not only to household consumption, but to the manner in which charity is dispensed. During Ramadan, many people prefer to offer food to the poor rather than money. Thus, mawa'id al-rahman, free iftar banquets set up in the streets and public spaces by individuals, charity organisations and mosques, have become an institution during the holiday season.
To prepare its members for the increased demand in foodstuffs occurring each Ramadan, the Cairo Chamber of Commerce produced a report, released prior to the holy month, forecasting the consumption of key items. Overall, the report predicted that consumption would increase by 25 per cent compared to the other months of the year.
As no holiday would be complete without the consumption of sweet items, figures for sugar, flour and yamish (nuts and dried fruit), are of key concern to retailers. For sugar, which was in short supply during the last two months, the chamber predicted that demand would increase by 40 per cent, while that for flour would go up by 50 per cent. Purchases of yamish this Ramadan, suggested the report, would total a whopping LE11.7 million -- a figure which is all the more impressive when it is taken into account that the of these items are being offered at discount prices.
This Ramadan there is stiff competition among small grocers and supermarkets vying for customers with low prices and special offers
photos: Sherif Sonbol
Consumption of meat and chicken was predicted to increase by 20 and 25 per cent respectively, while purchases of tea were forecast to go up by 20 per cent.
As vendors prepare to meet this demand, competition increases. But this year capturing consumers' attention has an added twist with the spread of supermarket chains. So, in addition to the small grocers and cooperatives, the state-owned Al-Ahram 2000 chain along with Metro and Sainsbury's supermarkets have jumped into the fray. The last three enterprises have made a splash with their rock bottom prices, setting off a price war with and among the other food sellers.
Using the means available to them to fight back, members of the grocery store division at the Cairo Chamber of Commerce, representing 16,000 grocery stores, presented a complaint at a meeting held a few days before Ramadan. Grocers expressed concern about the impact on their businesses of the sometimes drastic reduction in prices by the two privately-owned supermarket chains.
To help small traders, the Ministry of Supply and Internal Trade has taken two steps. Firstly, Minister Hassan Khedr suggested to chambers of commerce that their members reduce their prices. Secondly, the ministry has sponsored a number of exhibitions for foodstuffs at which vendors were given the opportunity to sell their products. The biggest of these was held at the Cairo International Fair Grounds where discounts on sugar, flour, yamish and meat ranged between 20 and 40 per cent.
It is noteworthy that the extent of competition between small traders and Sainsbury's and Metro chains had already decreased months ago. Immediately following their opening, these chains enticed new customers with loss-leaders, causing a furor among small traders. When the plight of small grocers began to be noted by public opinion, the management of supermarkets responded by raising prices slightly.
Supermarkets, however, have not given up the fight and are doing their best to offer more for less with discounts and offers to "buy one item, get the other for free."
"No one should complain about these discounts," says the chamber's Nawara. "Throughout the world, supermarket chains and individually-owned grocery stores operate for the benefit of the consumer." Providing the consumer with quality goods for low prices, "should be no problem when the Cairo market is made up of more than 16 million people," said Nawara.
Offering advice to small retailers, Nawara said they will not be able to compete with the new supermarket chains, during Ramadan or at any other time of the year, unless they offer quality goods at reasonable prices and develop the way they display their products. He also suggested that small retailers need to aim at selling a high volume of goods with a low profit margin rather than selling only a few items at considerable profit.
© Copyright Al-Ahram Weekly. All rights reserved
weeklyweb@ahram.org.eg