Market Watch: Abu Dhabi electronics sector in a slump

Barely had the Abu Dhabi electronics market emerged from a correction, when various factors combined, including the September 11 events, to push the market into a deeper crisis.

Poor buying or less spending by Asian expatriates, availability of cheaper unbranded products and absence of tourists are major factors that have hit the electronics market in Abu Dhabi. This is despite retailers pulling out all stops to woo buyers.

The market was not in good shape for the last two to three years and after September 11, things got only worse.

After the boom days of the mid-1990s, the electronics trade in the UAE went through a bad patch, but many distributors and retailers that weathered the recession remained in the market to reap reasonable profits.

But since early 2000, demand has been lukewarm and margins have been thin. "Compared to last year this year sales have been down anywhere between 10 and 20 per cent," said V. Jayachandran, manager of Jumbo Electronics' showroom in Abu Dhabi.

Jumbo Electronics has six retail outlets in the capital.

"Most of our buyers used to be Asians, particularly Indians, who used to carry electronic items back home on every holiday. But now all leading brands are available in India and expatriates prefer to buy them there due to various reasons.

"And in the last one year, especially after September 11, there has been a definite slowdown in spending on electronic items," explained Jaychandran.

Western expatriates normally purchase items such as cameras and video cameras.

According to John Zachariah, who is in charge of the JVC showroom, customer flow is low and if at all sales have been 'decent', it is because of our brand image.

"Japanese brands are moving - although slowly - but generally the electronics trade is witnessing a bad patch. Customers are not interested in spending and they don't give consideration to quality," he said.

Dealers with exclusive dedicated showrooms representing global brands also face competitor from hypermarkets and departmental stores.

"Buyers have taken to purchasing electronics at places such as Carrefour, Abu Dhabi Co-op or departmental stores like Lulu Centre, KM Trading combining their other shopping," noted Zachariah.

These places also offer discounts and numerous offers such as weekly draws.

Not surprisingly, the big brand electronics players also embark on promotions on a regular basis. Currently as part of the Dubai Summer Surprises (DSS), Jumbo has special offers in Abu Dhabi as well.

"There are promotions and special offers in Abu Dhabi even during the Dubai Shopping Festival and in effect almost through the year, we have to have promotions to entice shoppers," said an electronics trader representing a South Korean brand.

Costless Electronics, an exclusive 3,000 square metre store of Abu Dhabi Co-op at the Mina Retail Park, has become the latest attraction for all the big brands at most competitive rates. "It has taken off well because this kind of a shop was missing in Abu Dhabi," points out Bejoy Thomas, marketing manager, Abu Dhabi Co-op.

The trade expects slow sales to continue through September.

"It will pick up in October but then Ramadan follows," said a trader. Perhaps, the capital's electronics trade needs to wait until December to see if the traders finally be able to get a smile back on their faces.