Fight is on for the customer in retail electronics sector

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Competition is growing in the retail electronics sector as summer promotions, branch expansions, new product launches and cross-brand marketing tie-ups are rolled out to boost sales.

Manufacturers are launching new models and products and offering longer warranty periods while dealers are going ahead with expansion plans in the belief that market conditions in the UAE are improving.

"I think the electronics market will do much better in the second half as the UAE is showing much more confidence despite the global financial crisis," said HS Paik, President of LG Electronics GulfLG Electronics Gulf.

"Most financial institutions have improved their liquidity situations and there have been no massive lay-offs of late, contrary to what was feared earlier this year."

He said the impact of the global recession had not hit the domestic electronics market severely - and South Korean brands such as LGLG has actually benefited.

The financial meltdown pushed down the value of the South Korean currency, giving the country's exporters a price advantage.

"The depreciation of the currency after the crisis has helped South Korean companies to become more competitive, especially with exports," said Paik. "And with the South Korean economy improving during the first half, the currency is getting stronger. However, as LGLG focuses on premium products I believe we can continue to strengthen our competitiveness throughout the year and increase our overall market share."

Paik is confident LGLG will increase its share in many segments and expand into new areas. He said though many expatriates left the country in the summer sales had been satisfactory, especially for air-conditioners, refrigerators, mobile phones and laptops.

Sanyo GulfSanyo Gulf, a wholly-owned subsidiary of Japan's Sanyo Electric, recently opened a specially designed showroom in Bur Dubai.

Takashi Hirao, Chairman of the Gulf division and the parent company's Chief Regional Officer for the Middle East, Africa and India, said: "The new Sanyo showroom strengthens our position and further expands our presence in this key market. We have prepared many exciting innovations as part of our intensified expansion programme in the region."

Ashish Panjabi, Chief Operating Officer of Jackys ElectronicsJackys Electronics, said the group was opening new outlets and offering summer promotions.

"The new showroom at the Dubai Mall is doing well as the footfall has increased considerably thanks to a special promotion, the presence of entertainment facilities such as the aquarium and the Dubai Fountain and the overall revival of sentiment," he said.

"Sales of mobile phones and laptops have been steady. Notebook computer sales have grown by 40 per cent in the first half of 2009 and the trend looks set to continue in the second half. Customers who use costly laptops tend to have a second notebook.

"We have bundle offers, extended warranty periods and a tie-up with Hotbrands International offering free meal vouchers worth a total of Dh1 million to customers who spend a minimum of Dh300."

Jackys has opened outlets in Ajman and Al Ain, the latter targeting local customers as well as regular visitors from Oman.

Sharaf DGSharaf DG has also expanded its branch network to Sharjah, where it opened a 500,000 sq ft outlet at Safeer Mall, and is looking for new premises in the Northern Emirates. The Sharjah launch was accompanied by bundle offers and special promotions. Meanwhile, the group is in the middle of a major marketing drive and is recruiting more staff for the additional branches.

Jumbo ElectronicsJumbo Electronics is running a "laptop mania festival" promotion. The scheme offers deals and bundles with products from HP, Compaq, Acer, Sony, Toshiba, Dell, LGLG, Lenovo and Apple. For every purchase of a laptop during the 31-day promotion customers get a free colour printer and IT accessories. And for every Dh300 spent a customer receives a raffle coupon for a daily draw, with prizes such as a Sony Bravia LCD TV, a PlayStation 3 and a Western Digital HD media player. There is also a weekly raffle for Intel-sponsored holidays.

JP Nambiar, Head of Retail at JumboJumbo, said: "Coinciding with the UAE's peak summer shopping season, this annual promotion provides residents with great bargains. The promotion has got even better this year."

JumboJumbo is also running a trade-in deal where customers can exchange old laptops for new ones.

EmaxEmax, the Landmark Group's electronics dealer, is going ahead with expansion plans. The group, which has a 115,000 sq ft showroom in Sharjah, has opened an outlet in Ajman and plans to increase its network to 33 outlets by 2010. And EmaxEmax plans to enter India, Egypt and the Far East.

The best deals in the city are available in the TV market. The prices of LCD TVs have almost halved, pushing up sales.

Paik said: "It has definitely increased our sales. Due to the lower prices of LCD TVs, customers who used to buy 29-inch CRT TVs have switched to LCDs. During the first half of the year our LCD sales have increased by 70 to 80 per cent."

Many manufacturers are launching new products. PanasonicPanasonic for example, has introduced nine LCD and eight plasma high-definition Viera TV models to the Middle East market.

Abby Thomas, Senior Manager, Consumer Electronics Department, at Panasonic Marketing Middle EastPanasonic Marketing Middle East said: "The way people see TV in the region has evolved dramatically and our products are designed to match our customers' changing lifestyles.

"The group recently launched the longest lasting alkaline battery in the UAE market. The Panasonic Evoia range are the first batteries to receive the Guinness World Records certification after stringent tests against competitors."

The demand for cooling products has not been affected by the economic downturn, said dealers. LGLG recently launched the Titan air-conditioner, which features cyclotron plasma and twin cooling technologies and has been designed specifically for the Middle East market. And many promotional offers are available for air-conditioners, refrigerators and other cooling products.

Paik said: "We recently launched a campaign for refrigerators where customers are offered five benefits on a wide range of models. And for the first time LGLG is offering 10 years' warranty on direct-drive washing machines. This means customers can enjoy a product with peace of mind for a very long time."

One electronics dealer said: "Summer is usually slower with many people travelling abroad. However, for product categories like air-conditioning and refrigerators, we expect sales will be better based on seasonality.

"Also with plasma and LCD TVs costing less I believe the sales growth in the sector will continue."

LGLG exports to nine other countries in the region, and Paik said there was a definite improvement in sales in the GCC during the second quarter over the first thanks to the resilient market fundamentals.

"I believe going into the second half of 2009 the market rebound will only be expedited," he said.

Consumer spending rises 32%
Consumer spending in the UAE increased by 32 per cent to Dh483.9 billion last year, according to Ministry of Economy figures.

And global electronics companies say their participation in Gitex Technology Week later this year will boost their long-term growth plans.

Some of the most influential companies in the consumer electronics market, including Genius, Ford, PanasonicPanasonic, Promate, Sanyo and Seagate, are committee to taking part in the event at the Dubai International Convention and Exhibition Centre from October 18 to 22.

Last year, the UAE's gross domestic product grew by 27.4 per cent to Dh929.4bn, up from Dh729.7bn in 2007. The jump boosted the UAE's per capita income to its highest level of Dh197,000, according to the ministry.

"Consumer sentiment across the region remains strong, especially in the UAE where tech-savvy consumers are some of the biggest spenders on electronics products in the world," said Helal Saeed Almarri, CEO of Dubai World Trade Centre, which is organising Gitex.

"Globally companies are looking for new and innovative ways to raise consumer confidence. Gitex gives market leaders the single most important face-to-face marketing channel of the year, allowing them to test their product strategies and secure early market share for new launches with the region's most savvy technology adopters."

By VM Satish

© Emirates Business 24/7 2009