“UAE Shoppers Become More Price-Conscious as Fuel Costs Rise”

UAE Shoppers Become More Price-Conscious as Higher Fuel Costs Put Pressure on Retailers

Consumers across the UAE are adjusting the way they shop as higher fuel prices add to household expenses and increase costs for businesses involved in transporting and distributing goods.

Retailers say some customers are responding by buying smaller quantities during each visit and returning to supermarkets more frequently. Others are becoming more selective, paying closer attention to promotions, comparing prices and concentrating their spending on essential products.

The changes come after a significant increase in UAE fuel prices for October, when rates climbed by Dh0.60 per litre as global crude oil prices rose.

The increase pushed petrol prices to their highest level in more than four years. During October, Super 98 was priced at Dh4.40 per litre, Special 95 at Dh4.28 and E-Plus at Dh4.21, representing an increase of about 16 per cent.

For retailers, the impact is being felt not only through changes in consumer behaviour but also through higher expenses associated with transportation, deliveries and distribution.

However, supermarket executives say the effect is not identical across all businesses, locations or product categories.

Shoppers become more focused on value

Mark Mortimer-Davies, CEO of Choithrams, said customers have become more thoughtful about how they spend their money.

According to him, shoppers are paying greater attention to value, promotions and price differences between products and retailers.

He said purchasing behaviour differs depending on the location and type of customer, but some community-based stores have experienced a noticeable change in basket sizes.

“In some community locations we have seen a slight shift towards smaller, more frequent baskets that may be directly linked to higher fuel prices,” Mortimer-Davies said.

This suggests that some households may be changing not necessarily how much they consume, but how often and where they purchase their groceries.

Instead of making one large weekly shopping trip, some consumers may be choosing to buy only the products they currently need and return later for additional items.

For households watching their budgets, smaller shopping trips can also make it easier to control immediate spending.

Consumers are not necessarily shopping less

Dr Dhananjay Datar, chairman and managing director of Adil Group of Supermarkets, said the current trend should not necessarily be interpreted as consumers reducing their overall shopping frequency.

Instead, he said, many customers are becoming more selective about their purchases.

Consumers are increasingly checking prices, concentrating on necessities and looking for promotions that offer better value.

Promotional campaigns and larger value packs can also help families stretch their household budgets.

This means the retail market may be seeing a change in the composition of shopping baskets rather than a major decline in supermarket visits.

Customers could still be visiting stores regularly while making more careful decisions about what goes into their baskets.

Value is becoming increasingly important

Kamal Vachani, deputy CEO, group director and partner at Al Maya Group, also observed that consumers are becoming more discerning.

He described shoppers as increasingly conscious of value and said they are making more deliberate decisions before completing purchases.

Essentials are receiving greater priority, while promotions that provide a clear financial benefit are attracting increased attention.

The trend reflects the broader pressure households can experience when everyday costs rise.

Fuel is one of several expenses that can affect family budgets. When the cost of filling a vehicle increases, consumers may have less disposable income available for other purchases.

That can encourage households to compare prices more carefully and reconsider discretionary spending.

Fuel prices affect retailers too

The impact of higher petrol prices extends beyond consumers.

Supermarket operators depend heavily on transportation to move products from suppliers and warehouses to individual stores.

Groceries may pass through several stages before reaching the customer, including transportation from producers or importers to distribution facilities and then onward to supermarkets.

Higher fuel prices can therefore increase the cost of operating delivery vehicles and other transport fleets.

Datar said the effect can spread through different parts of the retail supply chain because transportation and logistics are essential to the movement of products.

Businesses that operate large delivery fleets or require frequent replenishment can be particularly exposed to changes in fuel prices.

However, Datar stressed that the impact is not immediate and does not affect every product category equally.

Supply-chain costs are made up of several factors

Mortimer-Davies said fuel is only one element of the overall cost of logistics and distribution.

While an increase in fuel prices can put pressure on operating expenses, retailers also need to consider sourcing costs, freight charges, supplier pricing and the efficiency of their wider supply chains.

For this reason, a change in petrol prices does not automatically translate into an equivalent increase in supermarket prices.

Choithrams is working with suppliers and logistics partners to manage the additional pressure and identify areas where efficiencies can be achieved.

This approach allows retailers to attempt to contain rising costs before they affect customers.

Scale can help retailers manage higher costs

Vachani said higher fuel prices are creating additional pressure on transport and delivery operations.

However, he pointed to Al Maya Group’s scale, established supply-chain infrastructure and operational discipline as factors that can help the company manage the challenge.

Large retailers may have more opportunities to consolidate deliveries, optimise routes and negotiate procurement arrangements.

These measures can reduce the impact of individual cost increases.

Vachani said the company is continuing to review its logistics and operating processes to strengthen its ability to absorb cost pressures.

Retailers look for operational efficiencies

Supermarket operators are increasingly relying on internal efficiencies to offset some of the additional expenses created by higher fuel prices.

Datar said retailers are focusing on several areas, including better delivery-route planning, improved inventory management and more effective use of vehicle fleets.

Optimising routes can reduce unnecessary kilometres travelled and lower fuel consumption.

Better inventory planning can also help retailers avoid unnecessary deliveries while ensuring stores have adequate stock.

Fleet utilisation is another area where businesses can identify savings by ensuring vehicles are used as efficiently as possible.

These measures can become particularly important if elevated fuel prices continue for a prolonged period.

Prolonged high fuel prices could increase operating pressure

Datar said that if fuel costs remain elevated for an extended period, some upward pressure on logistics and operating expenses would be unavoidable.

However, he does not anticipate an immediate or identical increase across all grocery categories.

Different products have different supply chains, transport requirements and cost structures.

For example, products that require frequent deliveries or specialised transportation may experience different cost pressures from products that can be stored and transported in larger quantities.

Retailers therefore have to assess the impact on individual categories rather than applying a single cost increase across their entire product range.

Shoppers could become even more selective

Datar expects consumers to become increasingly focused on value if high fuel prices persist.

That could mean greater interest in promotions, discounts, private-label products and larger value packs.

Consumers may also compare prices across different supermarkets before making purchases.

Retailers that can maintain competitive pricing while offering promotions may therefore have an advantage in attracting customers.

The ability to provide value without compromising product availability or quality could become increasingly important in a competitive grocery market.

UAE retail sector remains resilient

Despite the additional pressures, Mortimer-Davies described the UAE grocery sector as resilient.

He acknowledged that continued high fuel prices could create further challenges for supply chains, but said retailers and suppliers would likely continue looking for efficiencies.

The UAE’s highly developed retail infrastructure and competitive supermarket sector provide businesses with experience in managing changing costs and consumer expectations.

Retailers are also able to use a combination of physical stores, digital platforms and delivery services to respond to changing shopping habits.

Al Maya remains positive about the outlook

Vachani offered a more optimistic assessment of the retail market.

He said he remains highly confident about the sector’s prospects and expects healthy growth.

He attributed this outlook partly to government economic initiatives and policies designed to support businesses.

According to Vachani, Al Maya Group is continuing to improve routing, inventory management and logistics processes to increase resilience and preserve value for customers.

The company’s strategy reflects the wider effort among retailers to absorb some of the impact of higher operating expenses rather than immediately transferring those costs to consumers.

Who absorbs the extra cost?

One of the key questions for shoppers is whether higher fuel expenses will eventually appear in supermarket prices.

Datar said retailers are taking a mixed approach.

Businesses cannot absorb every increase indefinitely, particularly if several costs rise simultaneously.

At the same time, grocery retail is highly price-sensitive, meaning retailers need to be cautious about passing additional expenses directly to customers.

As a result, retailers are absorbing some of the pressure while also working with suppliers to keep prices competitive.

The balance between controlling costs and maintaining customer value is likely to remain an important issue if fuel prices stay high.

Retailers do not want to pass on the full increase

For supermarkets, raising shelf prices can carry its own risks.

Customers have many alternatives, and even relatively small price differences can influence where consumers choose to shop.

Datar said this sensitivity is encouraging retailers to absorb part of the additional cost rather than transferring the entire increase immediately.

Promotions and supplier negotiations can also help limit the effect on consumers.

However, if multiple input costs continue to rise, retailers may eventually face greater difficulty in absorbing the increases.

Choithrams prioritises customer value

Mortimer-Davies said protecting customer value remains a priority for Choithrams.

The retailer does not base pricing decisions exclusively on fuel expenses.

Instead, the company reviews its overall cost structure and looks for operational efficiencies before determining whether changes to shelf prices are necessary.

This approach means fuel prices are considered as part of a much wider set of business factors.

Sourcing costs, supplier charges, freight expenses and internal efficiencies can all influence the final price paid by consumers.

Al Maya reviews its operating model

Vachani said Al Maya is also concentrating on procurement efficiencies and reviewing its operating model.

The objective is to identify opportunities to absorb higher costs wherever possible.

Procurement can play a significant role because retailers purchase products in large quantities.

Efficient sourcing and supplier relationships can help reduce some of the pressure created elsewhere in the supply chain.

Combined with better logistics and inventory planning, these measures can help retailers maintain competitive prices.

Could higher fuel costs change where people shop?

Fuel prices may also influence where consumers choose to purchase groceries.

Datar said proximity could become more important if transportation becomes more expensive.

For smaller top-up purchases, some shoppers may prefer a supermarket closer to their home or workplace rather than driving farther to another location.

A shorter journey can reduce fuel consumption and make quick shopping trips more convenient.

However, established supermarkets continue to attract customers because of their broad product selection, competitive pricing and promotional offers.

This means proximity is only one factor in the decision-making process.

Neighbourhood stores could benefit

Community-based supermarkets may have an advantage when consumers are trying to reduce unnecessary driving.

A shopper who needs only a few items may find it more convenient to visit a nearby store rather than make a longer journey.

This could partly explain the smaller and more frequent shopping baskets observed at some community locations.

Rather than combining all purchases into one major weekly trip, customers may increasingly choose nearby stores for smaller replenishment visits.

The trend could be particularly relevant for consumers who are highly sensitive to transportation costs.

Home delivery remains important

Higher fuel expenses could also influence demand for home delivery.

Datar said delivery services continue to appeal to consumers who want to save time and reduce the need for transportation.

For some households, ordering groceries online can eliminate the need to drive to a supermarket.

However, physical stores continue to play an important role, particularly when consumers want to select fresh produce themselves.

The two channels therefore continue to complement each other.

Consumers use both physical and digital channels

Mortimer-Davies said customers choose between physical stores and online channels depending on the circumstances.

A shopper may visit a supermarket for fresh produce or a larger weekly purchase while using digital delivery services for smaller or urgent orders.

This changing pattern is encouraging retailers to strengthen their omnichannel capabilities.

For supermarkets, providing a consistent experience across stores and digital platforms can help them remain competitive as customer habits evolve.

Choithrams expands its neighbourhood presence

Choithrams is also seeking to make its services more accessible to customers during their daily journeys.

Mortimer-Davies highlighted the retailer’s neighbourhood presence as well as the launch of Quickerr by Choithrams across Dubai Metro locations.

The initiative brings the retailer closer to customers who are already travelling through the city’s public transport network.

Such locations can be particularly useful for shoppers looking to make smaller purchases without making a separate trip to a larger supermarket.

Supermarket footfall remains healthy

Despite the changes in consumer behaviour, Vachani said Al Maya Group is continuing to see strong and encouraging footfall across its supermarkets.

He expects this momentum to continue as the festive season approaches.

The comment suggests that higher fuel prices have not resulted in a broad collapse in supermarket visits.

Instead, consumers appear to be adapting how they shop.

They may be more selective about purchases, but supermarkets remain an important part of everyday life for households across the UAE.

Smaller baskets do not necessarily mean weaker demand

The distinction between basket size and shopping frequency is important.

A smaller individual transaction does not automatically indicate that consumers are buying substantially less overall.

A household could make several smaller purchases during the week rather than one large purchase.

This can change the way retailers measure customer behaviour.

Supermarkets may need to look beyond average basket values and consider visit frequency, product mix and the level of promotional activity when assessing demand.

Festive season could boost retail activity

The approaching festive season could provide additional momentum for the retail sector.

Vachani expects supermarket activity to remain healthy as consumers prepare for increased celebrations and gatherings.

Seasonal demand can lead to higher spending on groceries, fresh food, beverages and other household items.

For retailers, this period could help offset some of the pressure created by increased transportation and operating costs.

The road ahead for UAE retailers

The latest fuel increase presents another challenge for supermarkets operating in a highly competitive environment.

Retailers must manage higher logistics costs while continuing to provide attractive prices to customers who are becoming increasingly conscious of value.

At the same time, consumers are adapting by comparing prices, focusing on necessities, taking advantage of promotions and, in some areas, making smaller but more frequent shopping trips.

Businesses are responding through route optimisation, inventory management, improved fleet utilisation, procurement efficiencies and closer cooperation with suppliers.

Consumers remain focused on value

For shoppers, the main message from retailers is clear: value is becoming increasingly important.

Customers are looking more carefully at what they purchase and are paying closer attention to promotions and price differences.

Higher fuel costs may reinforce this behaviour, particularly among households that rely heavily on private vehicles.

Some consumers may reduce the size of individual shopping trips, while others may shift towards nearby supermarkets or online delivery services.

No immediate uniform price increase expected

Despite concerns over higher logistics expenses, retailers do not expect an automatic or immediate rise across every grocery category.

The effect will depend on factors such as product sourcing, transportation requirements, supplier pricing and the duration of elevated fuel costs.

For now, supermarkets are attempting to absorb some of the additional burden through operational improvements and supplier negotiations.

However, executives acknowledge that sustained increases in fuel and other input costs could eventually create greater pressure on operating expenses.

A changing shopping landscape

The UAE’s grocery market continues to adapt to changing consumer expectations.

Shoppers want competitive prices, convenient locations, reliable availability and flexible ways to purchase products.

Fuel costs add another consideration to those decisions.

For some households, the response may be as simple as making a shorter drive or buying fewer items at a time.

For retailers, the challenge is more complex: they must control transportation and supply-chain expenses without undermining the value proposition that keeps customers coming back.

As fuel prices and wider operating costs evolve, both consumers and supermarkets are likely to continue adjusting their strategies.

For now, retailers remain broadly confident in the resilience of the UAE grocery sector, while consumers appear increasingly determined to make every dirham count.