UAE Consumer Electronics Market To Grow 7.7% To Dh14b

Dubai: The total consumer electronics market in the UAE is expected to grow by 7.7 per cent to Dh14 billion this year, compared to Dh13 billion last year, according to estimates by research firm Euromonitor International.

The growth is mainly coming in from inflation in inventories while demand for brand-related products is declining, said Isam Arshad, research analyst at Euromonitor International.

“For example, if brand A has imported 100 units into the UAE last year and they could only sell 60, the balance carried forwarded is 40. This year, they again import 100 units but they have 140 in inventory to sell this year. So, the brand is forced to sell 140 units this year by promotions. This is how inflation in inventories happens,” he explained.

He added that brick and mortar and hypermarkets are still the “dominant players” in the consumer electronics space in the UAE, “contributing around 81 per cent of the total sales while e-commerce contributes only around 19 per cent.”

The estimates suggest that both volume and value are increasing slightly this year but the rate of growth is declining.

In 2017, Arshad said, the volume was high and especially towards the end of the year due to pre-VAT (value-added tax) sales as people purchased products more brick and mortar towards the last quarter of 2017.

“The market would be normalising towards the end of this year. People will be recovering from the VAT shock and readjusting to the inflation in the prices in the first two quarters.

“Residents in the UAE are working expats and most of the companies are expected to start paying inflated-adjusted salaries from March, beginning of the new fiscal year, and that would reflect in sales by the end of this year. In 2019, we will see a potential growth,” he said.

Internet retailing is set to grow but albeit at a slow pace. In the UAE, Arshad said, the internet retailing is set to grow by around six per cent this year to Dh950 million compared to Dh900 million last year. It is is expected to grow at the rate of 20 per cent reaching 1.7 billion in 2023.

“Consumers are not that comfortable to buy mobile phones and TVs online as they want to physically touch and feel the product. What people do is they touch and feel the product from a brick and mortar store and buy it from their website. People are very comfortable with it rather than buying from a pure e-commerce store,” he said.

People buy TVs only when there is a promotion, he added, saying that grey market sales are doing good business as they have promotions most of the time but it is not getting recorded in analysts’ findings. Both volume and value of the TV sector are expected to decrease by one or two per cent, according to Arshad.

Moreover, he said that hypermarket and specialised electronic stores reach to customers through the website is increasing, as they invest more into their store, brand, mobile applications and distribution network, the delays in delivery of the product to the consumer would be reduced.

“Online promotions and in-store promotions along with festivals remain the most attraction for the market,” he said.