JEDDAH, 6 September 2006 — US small retail storeowners have for years been fighting the market giants, such as Wal-Mart, which steeply undercuts small retailers (sometimes at a loss) through the power to buy huge inventories at lower costs, and by having streamlined hi-tech control of inventories, integrated logistics systems, and relationships with the largest manufacturers, usually located in low-wage countries where workers have little or no collective bargaining rights, work benefits, or representation.
Now, small stationery shop owners in Saudi Arabia are starting to feel the pinch of competing with huge multinational hypermarkets, such as Carrefour and Panda.
Muhammad Yamani, a Jeddah stationery storeowner, said that he is losing money more than ever before, and he lays the blame squarely on the growth of hypermarkets in the Kingdom. As the “Back to School” and Ramadan shopping season is about to commence, Yamani estimates that he will lose about 40 percent of what he used to make thanks to the “big box” stores, as they are called in the US.
“In the past before the school season, we use to sell between SR4,000 ($1,066) and SR6,000 ($1,600),” Yamani told the daily Al-Madinah recently. “Now we’re talking about SR800 ($213) to SR2,000 ($533) per day.”
Yaser Abdu, a Madinah stationery storeowner, says some of his products are sold at cost in an attempt to compete with the giants, but even then he cannot match the pricings.
Saadullah, the manager of a big hypermarket store in Jeddah, said that stationery sales are witnessing huge boom, making up to 7 percent of the sales in the hypermarket he manages during the “Back to School” season.
He said that it constitute 7 percent, or SR9,000 ($2,400) per day, from the hypermarket total sales.
Small storeowners like Yamani are calling on authorities at the Ministry of Commerce to regulate the market, according to the report. But Saudi market authorities may themselves be limited in their choices now that the Kingdom has entered the World Trade Organization, which aims to prevent countries from implementing punitive tariffs or other price-control measures that restrict other members from access to the domestic market.
Critics of big-box stores in the US claim that the high-volume/low price structure, coupled with attempts to prevent collective bargaining and suppressing wage increases through the use of part-time help, and manufacturers in countries without fair labor practices, is not only hurting small retailers but also workers at home and abroad.
Proponents, on the other hand, point out that capitalism favors those that can offer the lowest prices and that lower consumer prices benefit the consumer and the economy as a whole.
