Have you ever noticed that the co-op are facing a threat?
Everyone who lives in the UAE is familiar with the Co-op’s. The Co-op is a favorable shopping place for those who like to buy stuff in large qauntity. It’s an ideal place for family shopping. In addition, there are several branches of the Co-op all over the seven emirates. Usually this place is crowded with people all the time, as they provide fresh fruites and vegetables. They sell all kinds of food, meat and dairy products, fresh and frozen. More and more they sell furniture, home appliances, stationary, clothes and cosmetics. Briefly they sell everything that a family or an individual might shop for.
Although the co-op offers all those facilities and neceesities that any shopper requires for, they are in the threat of being closed by the government for rising their prices. As in an article written by Mohammad Ezz El Deen, a staff reporter, “Co-ops get ultimatum”said that the consumer prices are continuing to rise, and accusations have grown that Co-ops are neglecting the interests of their customers and focusing instead on high profit margins. And that the Ministry of Economy threatened the co-ops that if they didn’t lower their prices their status will be withdrawn as they are preparing a law that will punish shops who sell goods at high prices without a valid reason. But studies found that Co-ops were weak players in a market dominated by foreign giants like Carrefour and Spinneys and that the bulk of Co-op's profits came from investment.
With regard to the Co-ops actions toward these threats is that they denied any of those accusations and have defended strongly the board members who have been accused of making record bonuses, and said that the Co-op have been following the rules under which they were founded.
The Co-op are blaming other factors that effect the way their prices are getting higher, they are saying that those are due to the increase prices in the global markets such as monopolies in some basic foodstuffs.
From my opinion, I really think this is really what is happening, and that’s the problem that they are dealing with and is threatening their survival. They said that it’s not fair that the cooperative societies have been put under fire because of achieving good financial results as this will not serve the issue of reducing prices of commodities in the local market. The managing director of the Emirates Cooperative Society, said Co-ops will hold a meeting after the Eid Al Fitr holidays to discuss necessary steps for acting on a recent Cabinet decision to break the monopoly of 14 basic goods such as sugar, rice and oil. Co-ops are planning to eliminate middlemen and import the goods directly from their sources, thereby reducing costs to consumers.
This will hopefully solve the problem of high prices not all but atleast will help them reduce some costs. But the real issue is that they make a lot of profits from investment and the current law don’t allow them to invest in the stock market. And that’s considered a problem for them because 50 to 60 percent of their profits come from investment. So the real non-market issue that really cause a problem to the Co-ops is the fact that there are laws that stop them from investing and be the highest in the market as compared to other competitors.
The Co-ops as I said earlier are willing to try to decrease their prices, but that from my point of view will not be enough for them to be profitable as they need to invest in the stock market to make profits. As from the statistics given, they made a profit of Dh 702 million which is 10 percent higher than last year, because of their engagement in investment activities.
So the real threat that they will be really facing is that if they couldn’t reduce some costs which on the other hand won’t help them to lower their prices, and can’t enter the stock market because of the law, then how will the co-op servive and stay a profitable cooperation?
Link: http://archive.gulfnews.com/articles/05/11/01/189688.html
Although the co-op offers all those facilities and neceesities that any shopper requires for, they are in the threat of being closed by the government for rising their prices. As in an article written by Mohammad Ezz El Deen, a staff reporter, “Co-ops get ultimatum”said that the consumer prices are continuing to rise, and accusations have grown that Co-ops are neglecting the interests of their customers and focusing instead on high profit margins. And that the Ministry of Economy threatened the co-ops that if they didn’t lower their prices their status will be withdrawn as they are preparing a law that will punish shops who sell goods at high prices without a valid reason. But studies found that Co-ops were weak players in a market dominated by foreign giants like Carrefour and Spinneys and that the bulk of Co-op's profits came from investment.
With regard to the Co-ops actions toward these threats is that they denied any of those accusations and have defended strongly the board members who have been accused of making record bonuses, and said that the Co-op have been following the rules under which they were founded.
The Co-op are blaming other factors that effect the way their prices are getting higher, they are saying that those are due to the increase prices in the global markets such as monopolies in some basic foodstuffs.
From my opinion, I really think this is really what is happening, and that’s the problem that they are dealing with and is threatening their survival. They said that it’s not fair that the cooperative societies have been put under fire because of achieving good financial results as this will not serve the issue of reducing prices of commodities in the local market. The managing director of the Emirates Cooperative Society, said Co-ops will hold a meeting after the Eid Al Fitr holidays to discuss necessary steps for acting on a recent Cabinet decision to break the monopoly of 14 basic goods such as sugar, rice and oil. Co-ops are planning to eliminate middlemen and import the goods directly from their sources, thereby reducing costs to consumers.
This will hopefully solve the problem of high prices not all but atleast will help them reduce some costs. But the real issue is that they make a lot of profits from investment and the current law don’t allow them to invest in the stock market. And that’s considered a problem for them because 50 to 60 percent of their profits come from investment. So the real non-market issue that really cause a problem to the Co-ops is the fact that there are laws that stop them from investing and be the highest in the market as compared to other competitors.
The Co-ops as I said earlier are willing to try to decrease their prices, but that from my point of view will not be enough for them to be profitable as they need to invest in the stock market to make profits. As from the statistics given, they made a profit of Dh 702 million which is 10 percent higher than last year, because of their engagement in investment activities.
So the real threat that they will be really facing is that if they couldn’t reduce some costs which on the other hand won’t help them to lower their prices, and can’t enter the stock market because of the law, then how will the co-op servive and stay a profitable cooperation?
Link: http://archive.gulfnews.com/articles/05/11/01/189688.html
posted by Diana @ 10:10 AM
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