In one of Cairo’s largest shopping malls, a crowd of people stood in two parallel lines waiting their turn to enter a high-end brand shop to enjoy big sales of up to 50%, which came amid a high wave of unprecedented price hikes.
The majority of shops, selling different products, began offering discounts and promotions in late December 2017, continuing into February and only expected to end in April, before the scheduled increase of fuel prices.
People pushed each other, ran into corners where the red sales tickets were more clear, aspiring to find good items at affordable prices. Even when prices are much better than before the sales, people are more limited, sticking to what they see as suitable for them and their budgets.
The offers were really tempting for many of the consumers who struggled to buy any products during 2017, which witnessed a major price hike that came as result of preceding economic measures.
Winter retail sales usually kick off in February or March every year based on regulations stipulated by the Ministry of Supply. However, the current season began in December. In 2017, the winter sales started at the end of January. However, they were not as big as the current sales season.
In November 2016, the Central Bank of Egypt floated the pound, as part of requirements set by the International Monetary Fund (IMF), with which Egypt agreed to a $12bn loan over three years. The pound floatation raised prices of different products, including food, medicine, electronics, and fuel, as well as electricity services, making life harder for Egyptians.
It further increased costs of all imported goods, resulting in some retailers and high-end shops not being able to provide customers with any new collection.
Since the beginning of 2018, the core inflation rates have been declining compared to 2017. Core inflation declined to 19.86% in December 2017, compared to 25.5% in November 2017, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS).
The current major sales wave has raised questions on why shops are extending the discounts period, while they are attempting to compensate for previous loses during 2017, and about consumers’ demand for the offers.
A brand manager at TownTeam shops told Daily News Egypt there is a decline in buy and sell movement since the price hikes. “We were supposed to start the offers in March, but this time, like other shops, we began sales early with them, all of us trying to get rid of the goods we have stored since last season,” he said.
“Our sales in 2017 were not promising at all; our consumers decreased. Even their consumption declined, with ones who use to buy three pieces now only taking one piece. Sweatshirt prices increased to EGP 600 or 700 after they were about 300. For the sale, we again returned the prices to previous averages. We are going to continue this until April,” he said.
The sales were not only applied at clothes shops, but even furniture, accessories, electronics, antiques, and cosmetics stores have discounts. In a short video report produced by the privately owned dmc channel, some owners of furniture shops in Damietta appear announcing that they have started an initiative to discount prices by up to 35% to compensate for the economic recession they have been facing throughout the past years.
“We started an imitative to decrease prices for youth who are going to marry soon. The sales are up to 35% to improve the situation for both client and trader,” said one of the owners.
Most retailers have large quantities of products in their stores, for failing to sell them during the past months, due to prices that suddenly increased while salaries remained stable. Price hikes led people skipping buying clothes and focusing on the essentials of their daily lives.
The winter season officially began in mid-January with a total of 2,180 shops applying discounts ranging from 20% to 50%, according to spokesperson of the Supply Ministry Mamdouh Ramadan.
“The number of shops that participated in the [sales season] reached 2,180 shops,” he said, adding that there are several applications from other shops requesting to participate in the sales.
Moreover, the owners of shops that seek to participate in the sales season should receive approval from the directorates of supply and internal trade of their governorates.
Hamdy Abu El-Enin, spokesperson of the garment division of the General Federation of Chambers of Commerce, clarified that the reasons behind the long period of sales is the retailers’ attempt to activate the buy and sell movement again, and to return customers to their shops. He further suggested that the discounts season might last until mid-February.
Speaking to clients, Ayla Amin, 26, said “I know that the winter season sales are supposed to start in mid-February and I have no idea why it started early this year. Discounts are good; it reminds me of the special products that used to be categorised as new collections two years ago. I totally believe that traders are trying to improve the situation, their sales declined during past months.”
“I recognised that the shops are not presenting any new collections, but the same items as those presented in the past two years, goods that they have failed to sell previously, so they are trying to get rid of them during the sale, or it seems like they are also unable to import any new products. Overall, for me, I saw no variety, weak material; even those presented in the new collection corners are not catchy at all,” Amin also said.
Medhat Mamdouh, 30, said, “I don’t feel like the prices decreased as a result of the sales, some shops have exploited the sales occasion and placed high prices, believing that people will buy anything with any prices as long as there are discounts on the goods.” He gave an example, saying that he saw a pair of shoes that used to cost EGP 1,000 before sale, but during the sale, increased to EGP 1,500.
The client comments implied that some owners wanted to hold sales to attract consumers, but at the same time, sell to clients at prices satisfying their policies.
With regard to the demand from clients on the sale offers, officials saw it as is weaker than previous years. Shops are only crowded on weekends or if there are great promotions. Despite ongoing sales, customer interest still is weak due to them lacking sufficient budgets, making people determined to buy only what they need.
Noha Mohamed, 37, a mother of three daughters, said she was not able to buy anything for her or for her husband, explaining that the sales were not that appealing for helping her to buy clothes for all her family members. “I bought seven items for my three daughters from a certain shop that I know that its prices are better than others, even without sales, and still, the prices were not sufficient for me to buy more of our needs,” she said.
Also, Salma El-Sabawaay, 25, agreed with Mohamed, saying “I think out of tens of shops, there could be four or three shops that have really applied good sales. The shops are really presenting very expensive prices, not allowing all members of a family to buy clothes at the same time, making parents comprise for their children. People became more dependent on promotions, like buy one get one free, as prices became unaffordable even during sales.”
With the constancy of salaries amid high prices in 2017, consumers seeking to buy winter clothes find it difficult, leading people to sell their old clothes at public markets and through social media platforms, in order to recceive extra money for buying new ones. In the end, many people end up not actually buying new clothes, as they head to the same places where they sold their clothes to buy other pieces, even if used.
Inflation led rich people to opt more for outlet shops and malls, and to depend on places, traditionally for the less fortunate, that they never expected to venture into. The situation is raising questions on how much worse it will be for both low- and high-income citizens if prices continue to rise during the upcoming years.