From the Desk of Loy Machedo: Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession
Almost all the newspapers in the UAE were buzzing about the 3 day “Super-Sale” in the Emirates starting from Thursday, May 18th 2017 to Saturday, May 20th 2017.
More than 750 retailers and 250 brands decided to join in with a staggering 30% to 90% Off on all products.
Brands like Guess, Steve Madden, Kurt Geiger, Roberto Cavalli, Galeries Lafayette, Furla, Missoni, Boutique 1, Scotch and Soda, Balmain, Aldo, Toms, Birkenstock, Charles & Keith, Nine West, Desigual, Al Jaber Optical, IDdesign, Marlin Furniture, Porsche Design and Disney Fashion decided to join in.
And when this happens – everyone screams – Welcome UAE Shopping Bonanza!!!
And the timing couldn’t have been better – Just before the holy month of Ramadan – where anyways the markets would be under a slump.
So now what is wrong with this SUPER SALE?
Isn’t it good that the consumers get 90% off on leading brands?
I beg to differ.
Instead, I come from the position stating – This will ensure the Recession that is already there – to go even deeper.
Let me share why.
Loy Machedo
The World’s #1 Personal Branding Coach
www.LoyMachedo.com
www.whoisLoyMachedo.com
www.ThinkPersonalBranding.Com
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Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession
Now before you decide to call me a ‘Dubai-Hater’, Pessimist or Negative Minded person – let me share with you a few theories of my own.
Meet Noel – A Filipino Expat living in the UAE (name changed to protect identity)
He and his wife came to the UAE to earn a living for him and his family as well as take care of his parents.
The combined salary of him and his wife – AED 16,000.
Thanks to the fact that they both worked for a reputed A-Class Company (as rated by the Banks) they got themselves an easy loan and easy credit cards with up to 10 times their salary. And on top of that the also got themselves a nice family car.
So now after 3 years of coming to the UAE from humble beginnings, they were living a dream life.
A fine apartment, Children studying in a good school, A good job and a so called Promising future.
At least that is what looked from the outside.
What people didn’t know was this.
Noel had 3 Credit Cards from 3 Banks totaling up to AED 105,000
Noels wife had 3 Credit Cards – All spent to the max on AED 75,000
Noel had a loan of AED 80,000
Noel’s Wife had a loan of AED 75,000
And then they had their nice car loan – AED 45,000
And after all the expenses were paid, every month Noel and his wife were left with AED 1,500 for shopping and other expenses.
And then one fine day, Dubai announced Expo 2020.
Suddenly all the rents, expenses and basic cost of living shot up.
His Landlord decided to celebrate Expo 2020 with doubling the rent.
Noel’s parking fees were now doubled
Noel’s Electricity bill increased by 50%
The school decided to celebrate the coming of Expo 2020 by increasing the already expensive School Fees to another 10%
And now all of a sudden Noel and his wife realized – they were now left with AED 100 per month to spare.
Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession (Contd…)
And then one fine day – he found out his wife was sick.
So in order to pay for her medical expenses – he did what most people in the UAE do. He took another credit card to pay for the expenses.
Now you may argue – oh, he wasn’t intelligent or smart enough with his finances.
Here’s the question.
Who is?
When you have SALE, SALE, SALE flashed across your face by every restaurant, fashion, lifestyle, shoes, clothing, gaming and home furniture brand – how much can you resist?
And then when you have 90% off flashed across your face – which sane person can say – Oh…I don’t need it, so why should I buy it?
Here’s the deal.
If 90% wasn’t offered – NO ONE would have gone and purchased the item.
So now when 90% is being offered – why does someone need it?
The fact is simple.
GREED overtakes NEED.
The human tendency to have more than what is required,
To collect more than what is needed
To hoard more than what can be used
Is now the trend of people in the UAE
Even to the point of getting into serious debt.
UAE is becoming like USA where people live beyond their means.
Just go to any house and check how many pairs of shoes, how many shirts and trousers in the cupboards, how many utensils and dishes and how many expensive toys are being stored without being used.
All for what purpose?
Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession (Contd…)
And has anyone stopped to ask this sensible question – Can any Global Brand actually give away a product for 10% of its price?
Or 50% of its price?
Do they actually make such a huge margin?
Or are they fooling the public?
Can someone so good to be true – actually be true?
Chances are – no one would be bothered.
Simply because UAE from being a nation of greatness is now becoming a expat hell-hole of greed where everyone is trying to outdo the other.
What people don’t seem to understand or don’t seem to realize is that every penny spent beyond their means will take month and months to pay off.
What most of those expats don’t seem to realize is that all the stuff that they are buying is a waste – and that money saved is more important than money spent.
Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession (Contd…)
And the biggest lesson of all is what the retailers are not thinking about – is what is being made to spend today – in hurry and excitement – will pay a price tomorrow.
What do I mean by that?
Take this example.
I earn AED 1000
I have only AED 100 to spare every month
Now suddenly I was flashed a Super Sale
And I decided to buy the extras and more
Why?
Because in my stupid head – I assumed
I would NEVER get this special offer again
So instead of spending AED 100
I overspend AED 500
Assuming – I was ‘saving’ by buying this great offer
So after I spent AED 500 – I was super happy.
But after the purchase is over, after I go home
The next month, I realize – oh…now I have to pay AED 500 back
PLUS I have to save AED 100 for my basic savings
So what do I do?
I keep 50 as savings and spend 50 to pay off my extra loan.
And to pay that extra AED 500 – it will take this poor man 10 months.
So now for 10 months – the poor man cannot buy anything new.
But wait – Did you assume the banks were in the UAE for Charity?
Nope.
They were there to ensure – they make money on your stupidity and impulsiveness.
Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession (Contd…)
So now for AED 500 spent – they will charge interest.
So where the poor man X could have paid off his loan in 10 months
Thanks to Hidden Charges, Extra Charges, Service Charges, Bank Charges, Sheild Charges, Surprise Charges and Expo 2020 Charges – he will successfully pay off the bank in 20 months.
So if you are a retailer – you will not see that customer for 10 to 20 months.
So the question is – was your short-term strategy of making him spend what he didn’t want by fooling him on a price tag of 30% to 90% off smart? Or dumb?
Given the fact that everyone was jumping into the 90% off scam, if you didn’t participate, you wouldn’t get any action – of course the smart thing was – join the fun.
But here is what will happen next.
No business for the next few months.
Lack of Business = Cut down costs
Cut down costs = Terminate Fixed Overheads
Terminate Fixed Overheads = Terminate High Salaried Employees
Terminate High Salaried Employees = Promote Lower Level Employees to these positions with slight increase in salary but double the work load
And that = Lesser Work Force
Lesser Work Force = Lesser Money Spent in Supermarkets, Shops, Retail outlets and Malls
And that equals the spiral called Recession.
Oh yes and not to forget – the people who do lose their jobs – had taken loans to purchase the 90% off stuff they do not need.
So now they have stuff they do not need – but no money.
Why UAE Shopping Bonanza – 3 Days 90% Sale Is A Reckless Recipe For Recession (Contd…)
And before you still harp on the fact that I am wrong – Think about this:
- How many Shopping Festivals does UAE have?
- Having GITEX twice a year did what good?
- Having Sale after Sale after Sale – how much can one single family purchase?
- How does a person with a fixed income but ever increasing expenses – Rent, Parking Costs, Road Toll, Increasing Costs on Commodities, Increasing School Fees and Increasing Medical Costs – How much can they can manage and how?
Are salaries increasing the same manner?
So now…..Can you please explain to me how does offering 90% off in an economy that is already experiencing recession and inflation help the economy…..I would be extremely interested to know.
Loy Machedo
The World’s #1 Personal Branding Coach
