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FEATURE

the street

abdel aziz street combines the virtues of a classic egyptian souk with the attractions of modern wholesale outlets and a touch of black market notoriety

it’s around 8 am and all is quiet on abdel aziz street. for now, the street is quiet, but in a few hours it will bustle with people searching for the best bargains on electric household appliances anywhere in egypt.

depending on who you talk to, abdel aziz street – off ataba square at the edge of downtown cairo – has a reputation as either a pristine example of supply and demand economics or a haven for merchants peddling merchandise of dubious origins.

the street wasn’t always like this.

local businessman haj hassan has worked on abdel aziz since 1960 and remembers a very different place than what’s there today. “there used to be a tram that ran here, the kind with an overhead wire, up until the 1960s,” hassan said. “but it was removed because the roadway got too crowded.”

there was a time when young couples would grace the street to visit stores selling bedroom furnishings, he said. that was back in the 1960s, however. now, only one shop packed with beds and wardrobes remains.

today, the street is crammed with customers darting in and out of stores peddling electrical goods, stacked literally floor to ceiling. what caused this dramatic transformation in a period of 30 years is a mystery. some say it was a natural occurrence, but old-timers like hassan say the metamorphosis was induced by the authorities. “these appliance stores showed up after the government cleared a neighborhood near al azhar sometime in the 1960s,” he said.

hassan, however, appears to be alone in this assessment. no one else interviewed for this story had ever heard of this incident. but then again, they aren’t in their seventies either.

there are no experts about egyptian street markets like abdel aziz, and no one can provide even the roughest figures for the street’s volume of trade. but there are theories as to why this commercial area exists. ali hewaam, first undersecretary at the ministry of internal trade & supply, thinks the street is no different than any other market in the country. “there is nothing strange about abdel aziz street,” he said. “it’s all about a story of supply and demand.”

however, there may be much more to the story. with its reputation for low prices, the street is also notorious for dealing in stolen goods that must be sold cheaply and quickly to avoid the watchful eyes of officials. hewaam said this reputation is blown out of proportion.

although the ministry occasionally carries out raids on shops, he said, the aim is not to impound stolen or smuggled goods. such raids are merely for consumer protection. “our job as supervisors of trade is to make sure defective goods are not sold, that the wares for sale are not used goods, and to make sure people aren’t smuggling or burning goods illegally,” he said.

“burning” is a term used to describe the rapid sale of items without leaving a paper trail. it may not be illegal to sell at low prices, but sometimes prices might be a bit too low. illegal burning often occurs when someone needs to make quick cash and therefore becomes a middleman between factories and merchants on abdel aziz street.

hewaam gave an example of how this happens: “someone visits a refrigerator factory and buys 100 refrigerators for £e 1,000 each with a check. he then goes to abdel aziz street and sells them for £e 950 – cash. abdel aziz street merchants then resell them at £e 970 while appliance stores away from the street have the same refrigerators for £e 1,000.”

because there is no paperwork involved between middleman and merchant, this procedure is illegal. without documents, not only does the middleman avoid paying tax, merchants get away without coughing up money to the government either.

hewaam said that illegal “burning” accounts for only about one percent of economic activity on the street. others disagree.

abd el sattar eshrah, secretary-general for the egyptian committee for international chambers of commerce, said that this operation is rather common, especially when people need cash in a country in the midst of a liquidity crunch. “this fast money can be used to finance any projects someone might have,” eshrah said. “he will sell them quickly because he needs the money right away. he makes less money this way, but he’ll find other ways to deal with installments he might have on something else.”

quick money schemes like burning can look like a good idea – if they work. but sometimes cash isn’t produced fast enough and the middleman, or the stores he deals with, can’t pay for other obligations. “they can’t continue like this forever,” eshrah said. “the wheel will turn around and around only so many times until many operations go bankrupt.”

the street’s mobile-phone shops, to take one case, certainly don’t appear to be going broke. these have blossomed over the past several years and are now nearly as ubiquitous as the electrical-appliance stores. and like the electrical-appliance shops, the street’s mobile-phone retail industry is said to be governed by unlawful activity.

essam abourisha, owner of a store specializing in nokia mobile phones, said abdel aziz street’s reputation for selling stolen or smuggled phones at cheap prices is well deserved. although illegal, retailing smuggled phones is good for business, he said. “the lure of cheaper phones attracts more customers, and the phones are sold faster,” said abourisha. “no mobile salesman with a shop actively smuggles, but if someone shows up with a few in a bag, most won’t refuse them.”

smuggled or stolen phones, on the whole, go for a couple of hundred pounds less than those sold legally, he added. but consumers take a gamble, because smuggled phones don’t come with guarantees and therefore can’t be repaired at an authorized dealer.

but smuggling is not the only reason mobiles are cheaper here than elsewhere in cairo or around the country. most shops on the street, abourisha said, have low overheads because they don’t run lights or have air-conditioning – unlike shops in more upscale areas. more importantly, the volume of competition between stores forces prices lower. “at first, a couple of years ago, prices were higher and competition less,” he said. “let’s say they would get a profit of £e 50 a phone. but now it’s down to £e 10.”

competition is what keeps prices competitive and customers coming back. longtime cairo residents like fatima saeed have learned if they want cheap, high-quality appliances, abdel aziz street is the place to go. “i go to abdel aziz street to buy appliances like refrigerators, washing machines, televisions, because they sell them in bulk so it’s cheaper than anywhere else,” she said.

she does not think of the street as a nest of illegal activity. in all her years of shopping there, she said, she has never come across anything illegal. “everything i buy comes with a guarantee. but they don’t sell by installments – it’s wholesale.”

for electrical-appliance merchants, wholesale is one of the keys to abdel aziz street’s success. saad abdel meguid, a merchant on the street for some 15 years, said pushing items in bulk was the trick behind the street’s fame. “we sell in bulk – that’s why we attract so many customers,” abdel meguid said. “we are wholesalers who earn low profits and make high sales.”

“high sales” means that massive quantities are sold quickly. this is the legal side of burning. furthermore, he said, prices never differ much from one store to another, because the market simply doesn’t allow it. “for example, the whole street buys refrigerators from manufacturing firms for the cost of £e 100, and i want to gain a profit of £e 10, while another retailer might want £e 5,” he said. “the mark-up for price does not increase or decrease more than that limit; it’s between £e 5 and £e 10.”

so no matter how hard customers bargain, prices are very unlikely to change. although they often ask for lower prices, abdel meguid said merchants rarely budge. “we don’t bargain because we, as traders, get a limited profit,” he said. “but customers love bargaining anyway.”

yet some stores still offer better deals than others. for one thing, prices tend to be around 5 percent higher at the entrance to the market, where the street meets ataba square, compared to the far end near abdeen. in this sense, abdel aziz works much like any street market.

abdel meguid also cited several other reasons for slight price variations. if a store is larger, it might have more overheads and therefore raise its prices to cover costs. also, there might be a slightly higher mark-up on all goods if a store deals mostly in imports.

according to eshrah, from the committee of chambers of commerce, imported electrical appliances are what made abdel aziz street first rise to fame. at the time, this sort of goods was not produced in egypt. but, he added, the wares sold on the street began to change as more products started being made locally. “before the 1970s, all items were imported, but by the 1980s we started manufacturing and assembling more ourselves,” he said. “i think that now 95 percent of fans and at least 50 percent of televisions are either assembled or manufactured in egypt.”

while many items are being produced locally, many are still imported. what concerns retailers is that, with the recent devaluation of the egyptian pound, prices might go up on imports. the same applies for local products, too, because many are assembled with imported components.

this may or may not hurt the market. for now, retailers like mohamed ibrahim, owner of the shams appliance store, are taking a wait-and-see approach. “i think sales movement will be affected for a while once the price difference sets in,” ibrahim said. “the customers will eventually accept new prices, and a balance will be achieved as i deal with other traders and we agree on prices.”

at the same time as contemplating the effect of the pound’s devaluation, many merchants are actively trying to figure out the complexities of the recently applied second and third stages of the general sales tax.

although he did not want to be quoted in detail, ibrahim said the tax was very confusing. the new tax regulations came in force the beginning of july, but, as of mid-august, tax authority officials had not come by to explain it or collect it.

but in any case, he said, consumers need not fear the tax, because it would not have a great impact on the prices of goods. “customers should be worried about high prices, but this has nothing to do with the new tax,” he said. “we might be in short supply of a certain product, and due to supply and demand the price might go up.”

these kinds of market forces do not just affect electrical-appliance merchants. some of the side industries that have blossomed on the street over the years also feel the prevalent buying and selling patterns.

“do you need a truck? do you need a truck?” a young man standing next to a small suzuki pick-up truck beckons to shoppers strolling along the sidewalk. he represents the street’s transport industry. most people don’t have cars that can handle a refrigerator or washing machine, so after a purchase is made, this service can come in handy.

the owner of the international company for transport, one of several pick-up fleets operating from abdel aziz, is a 15-year veteran of the street. while others described the economy as sluggish, abdel mohsen abdel qawi said business was great. “slowdown in the market? these merchants are complaining about nothing – they don’t place their faith in god,” abdel qawi said. “if there is a real problem we would’ve been affected. but we haven’t.”

some of the best business he ever witnessed was in the final days of june before the application of the new sales tax rules on july 1. in a frantic rush to avoid what they thought would be higher prices, customers flocked to the street in droves. “i think the busiest we’ve ever been was at the end of june, when people were coming until two in the morning,” he said. “afterwards we had three of the slowest days, because people were afraid prices had risen.”

unlike with the stores, he said, customers have a lot of bargaining power with transporters, who charge by distance, number of items and how far the goods must be carried after unloading. customers sometimes wander from truck to truck trying to get the best deal. however, abdel qawi added, each trucking company has minimum price limits that cannot be breached.

although heavy bargaining ensures intense competition among the drivers, the minimum prices are unofficially agreed on between transporters, so undercutting doesn’t take place. “there is fierce competition between us,” abdel qawi said. “we don’t go to the extent of spying on each other, but we listen to what others are offering.”

the need to make money in the face of tight competition helps abdel aziz street remain a consumer and distributor magnet. couple the economic reality of supply and demand with a reputation for peddling cheap, possibly illegal items, and the recipe exists for a successful street market. “that’s the reputation of abdel aziz street,” abourisha, the mobile-phone vendor, said. “many things come without guarantees, but cheaper than anywhere else.”

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