Economy

Summer sale aims to stimulate Egypt economy

By Mohammed Mahmoud in Cairo

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This file photo from February 21st, 2013 shows shoppers inside the City Stars Shopping mall in Nasr City district, east of Cairo. [Khaled Desouki/AFP] 

Close to 3,000 retailers in Egypt are participating in the government-sponsored summer sale, which kicked off August 6th.

The sale, a joint initiative by the government and the Federation of Egyptian Chambers of Commerce, aims to stimulate commercial activity, which has been sluggish as a result of rising prices.

Discounts of up to 70% are being offered on many products, particularly clothing and leather goods, with most discounts ranging from 25% to 50%.

Participation was not mandatory, the Ministry of Supply and Internal Trade said, but businesses that wished to participate needed to obtain prior approval from the Department of Supply and Internal Trade, which involved an inspection.

The last week of August saw 2,904 shops participating.

The summer sale aims to "stimulate buying in the market to overcome stagnation, especially in the clothing market", said Assistant Minister of Supply for Internal Trade Affairs Ayman Husamuddin.

"The Ministry of Supply and Internal Trade is ramping up the monitoring of shops to ensure the validity of the offered discounts and that the offered goods conform to standards," he told Al-Mashareq.

Shop owners are free to set the discount rate on their goods, "provided the discount is real and not false" and the price of the product before and after the discount is displayed, he said.

For close to four decades, summer and winter sales have been "annual events sponsored by the Egyptian government to stimulate buying and selling", Husamuddin said.

Stimulating commercial activity

There has been a significant drop in consumer purchasing power recently, as sales did not exceed 40% of the stock, said Yahya Zananiri, head of the ready-made garments division of the Federation of Chambers of Commerce.

"The rise in the prices of summer clothes this season ranged between 15% and 20% due to the rise in the cost of production and import," he told Al-Mashareq.

"The summer sale is a way to stimulate commercial activity in order to increase the sales percentage at the end of the summer season," he said, noting that the sales percentage during last year’s summer sale reached 60%.

"Most of my customers are families who usually buy school clothes," said merchant Tharwat Mahmoud, who owns a clothing shop in downtown Cairo.

"Sales since the beginning of the year have been sluggish," he told Al-Mashareq.

The high price of clothing and footwear is "due to the rise in import costs, since the decision in November 2016 to float the value of the Egyptian pound against other currencies", he said.

Egypt launched an International Monetary Fund-supported reform programme in 2016 after its economy faced rising imbalances that led to high public debt, a widening current account deficit, and declining official reserves.

The summer sale encouraged many families to shop, Mahmoud said, with discounts of up to 50% reducing prices to pre-2016 levels.

"Sales picked up in the week of [Eid al-Adha] and the last week of August, as customers flocked to buy discounted clothes and shoes," said Saeed Mustafa, who works at a shop that sells garments and footwear.

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