Tough festive business

Food prices remain high as service companies offer cuts

The end of year festive season is coming during tough times and businesses need to devise new ways of reaching out to old customers and attracting news ones, according to Charles Ocici, the executive director of Enterprise Uganda, a UNDP sponsored business support organisation, writes Julius Businge.

Ocici says businesses that are offering discounts amidst the tough prevailing conditions are doing the right thing.

“The discounts have come at the right time,” he told The Independent in interview on Nov. 9, “they are coming at the time the economy is performing badly.”

He said he was unhappy that a section of businesses does not pass over the offers to the consumers even when they are offered from the suppliers.

Ocici advised business managers to offer goods and services to creditworthy customers on credit, have sufficient stock to be able to meet the season’s ever increasing demand, offer good discounts, and use a list of your old customers to get new ones.

He said business owners need to cross-sale related products or services to their customers to boost profit margins.

This year is ending when, food stuffs, which is one of the items that households spend a large portion of their income on, seems to be scarce and becoming costly.

In the latest consumer price indices, the Uganda Bureau of Statistics (UBOS) blames the scarcity of supply and hike in food prices to drought.

The Bureau said annual food crop inflation rose rapidly from minus 1.9% in three months prior to September, 2016 to 5.1%.

Once again business owners seem to be already embracing the mood of the festive season and cutting prices and offering gifts to boost their sales, mainly in the services sector. Telecommunications, airlines, and pay TV appear to be the most aggressive this season. Mobile money service providers are the surprising entry into the discounts market. Although some of the rate cuts are small; down to about 9% and going to customers engaged in very small transactions below Shs50, 000, there are offers of up to 64% cuts in transaction fees on some platforms. In addition to these reductions, customers can borrow money through their mobile money accounts under the new product introduced by some companies.

The airlines have various offers, including discounts on ticket rates and a chance to win lucky tickets to destinations they fly to. Some deals offer free accommodation, and fully paid-up city tours in selected destinations.

Commenting on the many offers, Ibrahim Kasirye, a principal research fellow at the Economic Policy Research Centre at Makerere University and member of the Uganda Economics Association said the season’s discounts tend to boost demand amidst tough economic times. He said majority of the population save their income earlier to spend during this festive periods.

“This is the culture of our people that cannot easily change,” he said.

Kasirye said on the whole, discounts are always good and benefit all players; businesses and consumers.

Hillary Nyakoojo is a lucky consumer who has benefited from the price cuts by a Pay TV service provider. The cut saved him Shs 40,000 which is about 12% of the price before the cut.

“I am happy with the new price offered to me,” said Nyakoojo, ““I will use the savings to buy other home items.”

Another customer, Moses Isiko, was equally happy about the reduction in sending rates on low-tier Mobile Money users.

“I know it is a small reduction but it counts,” he told The Independent.

****

editor@independent.co.ug