In light of crisis, discount sales come early this year

From "50-percent-off" to "buy-one-get-one-free" deals, local retailers are scrambling to boost sales amid widespread financial difficulties associated with the unfolding global economic crisis. While most shops traditionally begin slashing prices in mid-February, this year was noticeably different as retailers all over the capital announced major discount offers in late December–just in time for the Christmas rush. 

According to Ehab el-Desouky, professor of economics at Cairo’s Sadat Academy, a number of factors contributed to this year’s unusually early discount season. "Business conditions haven’t stabilized yet due to the economic crisis," he said. "Moreover, increasing competition between local industry and imported goods has pushed local firms to become more competitive."

According to recently-released figures from the state-run Central Agency for Public Mobilization and Statistics (CAPMAS), the annual rate of consumption in Egypt for garments, fabrics and shoes has decreased from 10 percent in the 2004/2005 fiscal year to only 5.5 percent in the 2008/2009 fiscal year.

In an effort to boost flagging sales, therefore, merchants and shop owners have resorted to the use of a time-honored tool: price reduction.

“In the malls of Dubai, this technique is applied frequently," explained el-Desouky. "In some cases, sales are offered three days a week throughout the year–even at upscale retailers like Pierre Cardin."

Another factor contributing to early sales this year is the fact that factories in Egypt’s new industrial areas have become increasingly competitive on the local market. In many cases, the same goods can be found at factories for half the price as those being offered by retailers in downtown Cairo.

“Well-known clothing brand Concrete, for example, sells shirts from its factories for LE200, while the same shirt will cost LE400 in its Mohandeseen or Nasr City branches,” said el-Desouky.       

A salesman at clothing shop Wild, speaking on condition of anonymity, agreed that this year’s early discount season could be chalked up to poor economic circumstances. “Demand is very low these days,” he said.

For this reason, he explained, the shop began slashing prices just before Christmas, New Years and Egypt’s Coptic celebrations, with the aim of boosting sales. “Actually, it turned out to be a good idea," he said. "It allowed us to meet our sales target and to generate greater profits."

Holiday discount campaigns have not been unique to clothing retailers.

According to the branch manager at a well-known chain of shops for eyeglasses, students represent one of their main customers. Therefore, when the school year was postponed following the Eid el-Adha holiday in late November, he said, “we thought it would be an appropriate time to offer discounts.” Retail prices for sunglasses, too, he added, had been marked down by as much as 50 percent for the occasion.

“When looking for economical alternatives to high-priced sunglasses, many customers look for knock-offs, which might provide a low-cost option but lack the quality of the original brand," he said. "By offering discounts, we can offer customers a balance between affordable prices and high quality.”

According to Mahmoud Amin, manager of clothing shops Femina and Adilisik, there is a law forbidding retailers from offering discounts before February. He clarified, however, that shops can apply at the Trade Ministry for an exemption.

“We received permission to begin offering sales in late December,” Amin said. “I think the government is showing some flexibility in light of deteriorating economic conditions.”

But while the situation may be dire for local retailers, there has been a silver lining for many consumers.

Housewife Safia Abdel Hamid, 50, says the spate of early sales represented a golden opportunity for her and her three children. “There have been reductions not only in the price of clothing, but also for shoes and bags," she said. "This has eased some of our financial burdens and helped us maintain our tight budget.”

The bottom line, said el-Desouky, is that "people don’t have any other choice but to allow sales promotions and discounts–at least until the economy improves.”

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