Electronics beating sales slump

Dubai: This is the time of year in Dubai when retailers really go the distance to boast the best deals on electronic goods for resident and visiting shoppers.

This year's Dubai Shopping Festival (DSF) is having to battle off the effects of the economic slowdown and those flogging home entertainment, kitchen appliances and all things computer-related are upping the anti.

2009 is challenging the city's retailers but many hope that responding to changes in consumer demand will eventually reap rewards.

Traders agree that so far this year demand for smaller, lower cost items remains strong, roughly at the same level as during boom-time 2008.

"Mobile phones, laptops and digital cameras are doing well," Jimmy Patel, General Manager of Retail at Jacky's Electronics, told Gulf News. "They are more or less as the same level of sales as previous years."

Nilesh Khalkho, CEO of Sharaf DG, agreed with Patel. "Most sales are in mobiles [phones], laptops and digital cameras," he said.

Khalkho explained that despite the economic downturn, the nature of items such as mobile phones and cameras was such that people wanted to regularly upgrade to keep up with technology and fashions, so sales remain robust.

"People replace their mobiles every six months or so," said Khalkho. "They are a fashion accessory - a lot of people are currently changing their phones. People also want to upgrade their cameras - they want more pixels in their new one."

On the other hand, sales in more expensive electronic goods show a marked slowdown at this stage in the Shopping Festival, and some retailers say this is due in part to cautious spending but may also be related to slowing real estate.

"High value consumer electronics are slow. There is a slowdown in cookers, side-by-side fridges and dishwashers," said Patel, adding that "real estate has something to do with that."

Khalkho also pointed to a slump in sales of such expensive purchases but remained upbeat about the future of this sector, linking it with changes in the supply of residential property in the city.

"Sales have slowed down on higher-priced items but as more houses get released onto the market we will see a rise," he noted.

Each year retailers set ambitious sales targets for the shopping festival, but with shoppers wanting more for their buck in an increasingly unsure economic climate, traders are going all-out to stay on top of their game at the most crucial time of the year.

Indeed, some say this year's festival is about survival rather than profits, as traders take the blow of the financial slump rather than passing it on to consumers.

"Sales are down as the market is down, retailers are needing to create maximum value to win," said Khalkho.

"Obviously there is demand, but there is not enough demand for all the competitors. The production has already happened - the stocks have to be liquidated. Profitability is definitely being hurt because prices are going down."

"It is a challenge to meet DSF targets," said Patel. "It is a case of sustainability rather than profit. The customer has become wise and is a little stringent with their spending. People are definitely holding on - they have become more cautious."

However, retailers are hoping that Dubai based buyers are taking advantage of the luxury of time, and waiting to take advantage of better bargains towards the end of the Festival.

Tourists typically are forced to buy their wares only in the short time period of their holiday, but as tourist levels are down on last year, trade is increasingly dependent on residents, and retailers believe this will push the bulk of spending into the final weeks of the event.

"Tourist visitors have come down, it is more resident populations," said Khalkho.

"We did a survey and spoke to around 700 people - the tourist composition was only seven to eight percent. In previous years tourist populations would be around 20 per cent."

Khalkho also believes most savvy shoppers were waiting for DSF, and as a result Sharaf DG's average sales jumped by 50 per cent on the first day of the Festival.

Patel also pointed out that Jacky's are anticipating a quick boost in sales towards the end, once cautious residents have had a chance to consider the wisest purchases.

"The first weekend was not a fantastic weekend," he said.

"The third week and fourth week are expected to be the make up period."

Over the years Dubai's consumer-culture has garnered spenders in the know. And with the economic challenges of 2009, DSF retailers are playing the waiting game.