UAE consumer electronics market to grow 6% to AED 14.2b this year
Posted by Naushad K. Cherrayil on 05 May 2019 12:12 PM
The total consumer electronics market in the UAE is expected to grow by 5.97 per cent to AED 14.2 billion this year compared to AED 13.4 billion last year, an industry expert said.
Isam Arshad, a research analyst at Euromonitor International, told TechRadar Middle East that mature products such as laptops, digital cameras and LCD TVs are struggling to remain in demand and manufacturers are keen to push for premium features and technological improvements to boost sales.
“People are looking to buy TVs with sizes over 50 inches and, at the same time; most of the key retailers are also displaying these sizes at their stores. The unit prices for OLED TVs are declining and that is attracting customers. Even the manufacturers have come to a consensus that the prices are extremely high for them to push in the market,” he said.
According to the research firm, the retail value of TV sales is expected to fall by 10.52 per cent to AED 1.7 billion this year compared to AED 1.9 billion last year. Even laptop sales are expected to fall by 12.5 per cent to AED 1.4 billion this year compared to AED 1.6 billion a year ago.
Arshad believes that one of the major reasons people are not buying conventional laptops is due to the cannabilisation of smartphones with people using Microsoft Office apps on their smartphones more than on laptops. However, he does see a surge in demand for gaming laptops. while laptop sales.
Wearables on the rise
Wearables, which are gaining traction in the region with the launch of new models, are expected to reach AED 542 million this year compared to AED 446 million a year ago, witnessing a growth of 21.53 per cent.
“The injection of luxury and fashion brands is also attracting fashionistas, who are more interested in aesthetics than technology,” Arshad said.
However, he said that newer categories such as wireless speakers and wearable electronics are subject to lower price erosion as manufacturers make a concerted effort to incorporate more features and better audio quality to avoid competing in the low-end segment.
He added that manufacturers are incorporating more features (voice assistants) at more affordable price points and voice assistants have become more refined now and can recognise any accent.
In the consumer electronics category, he said that smartphones are the money makers and contribute more than 46 per cent to the total sales. Retail value of smartphone sales is expected to reach AED 6.6 billion this year compared to AED 5.3 billion a year ago amid a slowdown in volume.
Arshad said that consumers in the UAE are price sensitive and the majority fall in the middle class segment. “Salaries are expected to remain the same this year compared to a growth last year. People are expected to postpone their purchases.”
Even though Samsung is the market leader followed by Huawei and Apple, brand loyalty is taking a hit.
Globally, smartphone sales declined for the sixth consecutive time during the first quarter of the year, with shipments falling 3.5 per cent to 310.8 million units. Samsung saw volumes fall 8.1 per cent while Apple fell 30.2 per cent year on year, the only positive factor was the 50 per cent growth from Huawei.
“Apple and Samsung have brand loyalty still in the UAE. When people want to upgrade their devices, they would prefer to stick to the same user interface and features. The chances of a Samsung user upgrading to another Samsung phone is around 60 per cent.
“It is easier for a Samsung user to make a move to a Huawei phone as both run on Android. Huawei phones have more features than Samsung phones and are reasonably priced. Huawei also has promotions throughout the year, a marketing technique, whereby they give headsets and watches as freebies. Now Xiaomi is also following suit,” he said.
Even though about 70 per cent of the Apple users who used to upgrade their devices every year are now upgrading every year by only 50 per cent, he said and added that one of the reasons is the high price point and the lack of accessories as freebies.
“Chinese companies are no longer content being fast-followers. They lead the smartphone market in terms of innovation. Vivo managed to launch the X21 that integrate biometric authentication into the display itself in June last year, ahead of Apple and Samsung,” Arshad said.
Moreover, he said that Xiaomi is following the same model of Huawei and it is getting noticed.
“They both entered as a low-priced competitor in the market but are now giving rivals a run for their money. Oppo and Vivo are driving sales, especially among the blue-collar workers,” he said.
Arshad said that Huawei is gaining market share and it is taking the market share from Samsung and Apple.
“Huawei and other Chinese players will gain more market share this year while Samsung will be flat and Apple may see a decline,” he said.
Online sales to surge 10% but still contributes only 15.5% of total sales in UAE
Online retail sales of consumer electronics in the UAE is expected to grow faster than offline retail this year but still contributes only 15.5 per cent of the overall sales.
Internet retailing or online retail sales are expected to grow by 10 per cent to AED 2.2 billion this year compared to AED 2 billion a year ago, according to estimates by research firm Euromonitor International.
The total consumer electronics market in the UAE is expected to grow by 5.97 per cent to AED 14.2 billion this year compared to AED 13.4 billion last year.
Isam Arshad said that electronics and appliance specialist retailers will remain the “dominant channel” for consumer electronics despite the continued rise of internet retailing.
“Consumers shopping for high-value products such as the latest ultra-HD LCD TVs would still prefer to look at the products in retail outlets before buying,” he said.
Quoting a Euromonitor’s Lifestyle Survey, he said that elderly and female consumers prefer to buy electronic products in the store, rather than online.
“Retailers are also experimenting with omnichannel retailing, allowing retailers to reach out to consumers on all platforms. Digital presence is a necessity for both retailers and manufacturers as connected consumers read reviews and product specifications online,” he said.
People are increasingly going online, he said and it is due to the decreasing prices of broadband and more households now have access to the internet.
“People will never buy a branded watch from online expect from the online retailer of the brand, due to trust. So when Amazon’s name comes in instead of Souq, it brings more trust among consumers and adds more weightage,” he said.