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Retailers have to contend with higher government fees at a time when consumers are also cutting down on their shopping expenses.
Retailers have to contend with higher government fees at a time when consumers are also cutting down on their shopping expenses.
Retailers have to contend with higher government fees at a time when consumers are also cutting down on their shopping expenses.

Costs spell end to retail salad days

For years, diners have tucked into the generous portions of seasonal vegetables that came free with every meal at Al Hallab chain of Lebanese restaurants in Dubai.

For years, diners have tucked into the generous portions of seasonal vegetables that came free with every meal at Al Hallab chain of Lebanese restaurants in Dubai. But sitting down to lunch at the restaurant's Mall of the Emirates branch recently, something was conspicuously missing from the dining table.

The complimentary platter of leafy mint, whole tomatoes, green peppers, carrots and cucumbers was nowhere to be found. In its place sat a small bowl of olives. As of two months ago, customers have been paying between Dh8 (US$2.17) and Dh25 for these "green salads", depending on the size of the serving, said a shift manager at the restaurant. Since the Ministry of Economy last year ordered restaurants across the country not licensed by the tourism authorities to stop adding a service charge to customers' bills, restaurants such as Al Hallab have seen their costs rise sharply.

"For us, it costs a lot of money," the manager said. "Imagine, 1,000 people come to your restaurant every day and you give away 200 to 300 vegetable [platters] for free. Without the 10 per cent service charge, it will cost us a lot." Rising costs are forcing restaurant owners to reassess their costs at a time when many of their customers are also feeling the pinch. Retailers are seeing other business-related fees rise as well.

Alwyn Tauro, the administration manager for the gourmet date retailer Bateel, said the cost of renewing trade licences rose 5 per cent this year, and landlords' service charges on some of Bateel's shops have increased as much as 25 per cent. Increased fees are one of many factors putting pressure on the retailer to push up its prices, Mr Tauro said. "The impact is there," he said. "The margin will decrease, definitely, plus other operating expenses are also increasing ? according to the market conditions, we might need to increase prices or we cannot operate."

Retailers are also having to pay more to municipal authorities for sales and promotions licences, said JP Nambiar, the head of retail for Jumbo Electronics stores. Before discounting goods for sales periods, retailers must apply to the relevant municipal economic department for permission. While it is difficult to say whether the promotions licence fee has risen, because there is not a set price, Mr Nambiar said officials had become much more "vigilant" in their enforcement over the past six or seven months and were requiring a fee more often. "They walk into the store and if they find that there is a particular item on which you are saying now you can save if you buy that, they will say 'look, who gave you the permission for this? You have got to pay for this'."

Mr Nambiar said he agreed that retailers needed to seek permission for sales periods to allow the municipality to regulate and verify those sales. But for promotions, such as giving a printer free with a purchase of a certain electronic item, paying for a licence was an unnecessary extra expense, he said. @Email:aligaya@thenational.ae

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