Some UAE consumers are making smaller and more frequent shopping trips, a shift in spending pattern following the fuel price hike, say retailers.
Fuel retail prices reached a more than four-year high in October following a Dh0.60 per litre hike for the month, driven by a surge in global crude oil prices. In October, Super 98, Special 95 and E-Plus were priced at Dh4.40, Dh4.28 and Dh4.21 per litre, respectively, representing an increase of approximately 16 per cent.
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Mark Mortimer-Davies, CEO of Choithrams, told Khaleej Times that customers are becoming “more considered” in their spending, with a stronger focus on value, promotions and price comparisons.
Shopping patterns vary by location and customer segment, he said, but “in some community locations we have seen a slight shift towards smaller, more frequent baskets that may be directly linked to higher fuel prices.”
Dr Dhananjay Datar, chairman and managing director of Adil Group of Supermarkets, said consumers are not necessarily shopping less often. Instead, many are being more selective about what they buy, comparing prices and prioritising essentials. Promotions and value packs, he added, are helping households manage their budgets.
Kamal Vachani, deputy CEO, group director and partner at Al Maya Group, also described shoppers as increasingly discerning and value-conscious, making “more deliberate purchasing decisions” and focusing on essentials and meaningful promotions.
Fuel prices add to logistics costs
Retailers agree that higher petrol prices are feeding into transport and distribution costs, but they differ on how heavily.
Datar said the rise has a cascading effect across the sector because transportation and logistics are integral to moving products from suppliers and distribution centres to stores.
Higher fuel costs add directly to expenses, particularly for businesses with large delivery fleets and those that restock frequently. However, he said, the impact is “not immediate or uniform across all categories.”
Mortimer-Davies described fuel as one of several cost components in logistics and distribution, so sustained increases can put pressure on operating costs. This, he said, must be viewed alongside sourcing, freight, supplier costs and wider supply-chain efficiencies. Choithrams is working closely with suppliers and logistics partners to manage the pressure.
Vachani said rising fuel prices can strain transport and delivery costs, but that Al Maya Group’s scale, operational discipline and established supply-chain capabilities allow it to manage the challenge.
To contain costs, retailers are turning to operational fixes.
Datar said grocers are concentrating on route optimisation, efficient inventory planning and better fleet utilisation.
He added that if fuel prices stay high for an extended period, there will “inevitably” be some upward pressure on logistics and operating costs.
He does not expect a uniform or immediate rise across all grocery categories, and expects consumers to become even more value-conscious in the coming months.
Mortimer-Davies described the UAE grocery market as resilient, saying additional supply-chain pressure is possible if fuel prices remain elevated, but that retailers and suppliers are expected to keep finding efficiencies. Vachani struck the most upbeat note, saying he is “highly confident” in the retail outlook and expects healthy growth, supported by government economic initiatives and business-friendly policies.
Vachani said Al Maya Group is optimising routing, inventory planning and logistics processes to strengthen resilience and protect customer value.
Absorbing or passing on costs?
On whether costs reach shoppers, Datar said retailers are doing a combination of both. They cannot absorb every increase indefinitely, he said, particularly when several input costs rise at once. But because grocery is highly price-sensitive, retailers are absorbing a portion of the costs and working with suppliers to maintain competitive prices rather than passing on the full increase immediately.
Mortimer-Davies said Choithrams’ priority is to protect customer value.
Pricing decisions, he said, are not based on fuel costs alone, and the company reviews efficiencies and manages costs carefully before considering any effect on shelf prices.
Vachani said Al Maya Group is strengthening procurement efficiencies and reviewing its operating model to absorb cost pressures wherever possible.
Footfall and home delivery
Datar said higher transport costs could make proximity even more relevant, with consumers possibly preferring stores closer to home or work for smaller top-up purchases. Established supermarkets, he added, still draw shoppers with variety, competitive pricing and promotions.
Mortimer-Davies noted Choithrams’ neighbourhood presence and the launch of Quickerr by Choithrams across Dubai Metro locations, which brings the retailer closer to customers during their everyday journeys.
Vachani said Al Maya Group is recording “strong and encouraging” footfall across its supermarkets and expects the momentum to continue as the festive season approaches.
On home delivery, Datar said it continues to gain importance among consumers who want to save time and transport costs, though physical stores remain central, especially for fresh produce.
Mortimer-Davies said customers use both physical and digital channels depending on the occasion, and Choithrams is strengthening its omnichannel offering.
Source: Khaleej Times