Monday, Jun 23, 2008
Gulf News
If you were to draw a trend chart for the key consumer electronics categories, UAE is the favourite testing ground for international consumer electronics vendors in terms of new product launches and marketing initiatives targeted for this region.
Morgan Stanley estimates that the Gross Domestic Product for the Gulf Cooperation Council (plus Egypt and Jordan) will reach $1,045 billion in 2008, more than twice the 2002 figure of $484 billion.
This strong economic growth is amplified by the real estate boom across the Middle East that continues unabated and translates into huge opportunities for manufacturers and resellers of white goods and consumer appliances.
Add to this the initiatives by the Brand Protection Group (BPG) aimed at stemming the trade of counterfeit goods in the GCC and Yemen, and the Dubai Department of Economic Development which separately announced plans to increase the penalties for convicted counterfeit goods traders in the UAE.
This, as it stands, augurs well for the industry. So why am I sounding a few warning bells when the industry appears to be coasting along nice and easy?
I'll tell you why.
It is because the end-user's decision-making process is not supported by skilled technical and sales staff. And this is across the board. In a market with a supposedly simple business model - receive box, add a mark-up and sell it on - it is important, now more than ever, that resellers and retailers build on the skills and capabilities needed to maximise sales.
The level of sales sophistication amongst the sales channels in the region varies greatly and this affects the message and communication the end-user or buyer receives when making that purchasing decision.
Many resellers sell products in a commodity form, which often means that many essential features - such as performance benefits and front-of-panel aspects which may set that particular product apart from others on the market - do not get thorough coverage during the customer's decision-making process.
Customer service
We either enhance levels of customer service in order to meet the growing sophistication of the country's consumers or we stay contented with minimal bottom lines. It is time to focus on educating sales staff about product portfolio and implement a range of customer service initiatives.
It's important to show a product in the best possible light and have staff that can speak knowledgeably about the portfolio of goods on offer. We have to invest heavily in 'brand building' with initiatives such as qualified personnel, warranties and after-sales service.
Standard training
The industry needs a standard training module conducted by a globally recognised leader in residential technology training and business support products.
I believe this will provide a fresh impetus to our industry because UAE's consumer electronics industry may soon find itself at a crossroad as extensive market liberalisation across the GCC exposes it to increasing levels of competition.
I may sound morbid but I must warn of a dark cloud hovering over the industry as price points continue to drop and competition becomes ever more aggressive.
Globally, a slowdown in some key Western European markets, a less buoyant Russian buying policy and uncertainty about sanctions in Iran may well exert some influence over markets in the Middle East.
The UAE consumer electronics channel sector is also threatened by the very thing that has facilitated its exponential growth - the country's low trade barriers - as counterfeit and grey market goods eat into the already slim margins available to legitimate vendors, distributors and retailers.
The industry's ability to deal with these challenges will play a key role in determining whether it can sustain the incredible growth rate it has enjoyed for much of the past decade.
- Vishesh Bhatia is group director - electronics, engineering and technologies, Al Futtaim group, and has been part of the Middle East consumer electronics sector for more than two decades.
Gulf News 2008. All rights reserved.
