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Consumer electronics remain a bright spot within Dubai's retail sector

Hamad Buamim, President and CEO, Dubai Chamber of Commerce and Industry, shares insights on key trends reshaping Dubai's consumer electronics and home appliances market

The UAE is one of the most important markets in the Middle East and North Africa region for consumer electronics trade flows due to its position as a regional hub and re-exporter of devices in the region. The domestic market is mainly served by imported devices from East Asia, while the UAE is a major re-exporter of these products to Africa and other Middle Eastern countries.
Dubai, in particular, is a lucrative consumer electronics market that records high levels of consumer spending. The size of this market is expected to grow 4.7 per cent from $2.5 billion in 2015 to reach $3 billion in 2020, according to recent analysis by Dubai Chamber and Euromonitor International. The value of the emirate's consumer appliances market is smaller, estimated at $585 million as of 2015, yet it has also seen steady growth in recent years. 
Market trends
There are a number of key trends that are influencing consumption patterns within Dubai's consumer electronics and home appliances market. The emirate's fast-growing population is pushing up demand for these products, while the rising number of tourists, and the expansion of the hospitality sector and shopping festivals have also supported sales in this market. The increased focus on smart technologies and devices on the part of government, schools and SMEs is contributing to demand for PCs and tablets in the short-term.
It's important to note that consumer demand has shifted in recent years, with more shoppers looking for devices and appliances that support healthy lifestyles, such as blenders, juicers, smart watches and other wearable technology products. Going forward, energy efficient appliances are expected to make up a bigger share of sales as consumers upgrade to greener products in an effort to reduce their utility bills. There has also been a shift in recent years toward more compact and multifunctional devices, particularly those offering Internet connectivity. As a result, items such as tablets and smartphones have seen solid sales growth. 
Leading retail channels 
Brick and mortar stores, specifically electronics and appliance specialty retailers and hypermarkets, continue to be the leading retail channels due to their advantage of having wide product selections and price ranges. These retailers also offer expert advice and tailored recommendations, and consumers for the most part still prefer to test out products in-store and rely on after-sales service.
When it comes to online shopping for consumer electronics and home appliances, this channel remains small. Although consumer electronics are among the most popular products sold on e-commerce platforms, the share of this distribution channel is only 3.5 per cent. However, Dubai retailers are realising the need to invest in digital channels as consumers spend more of their time online. Interestingly, more consumers are turning to online retail websites to research prices and descriptions before buying products in store.
The portable consumer electronics category leads the market with sales estimated at around $1 billion in 2016, followed by computers and peripherals ($937 million) and in-home consumer electronics (over $600 million). Portable electronics are also expected to retain their lead over the next four years with a sales forecast of $1.27 billion by 2020. 
Outlook for the sector 
With economic activity expected to pick up in the lead up to Expo 2020, spending on such products within the UAE is likely to increase as consumer confidence improves. Growth in UAE household spending, expected to average 7.1 per cent through 2020, may potentially support sales of electronics and appliances over the next few years.
The UAE is home to a predominantly young and tech-savvy population that is frequently looking to upgrade their devices and keep up with the latest innovations, especially in the categories of smartphones, tablets and smart watches. Improved connectivity, growing popularity of social media platforms, and an increased focus on Dubai's smart city transformation could also potentially encourage more consumers to buy devices that offer Internet access.
Shopping festivals and special events and promotions will continue to drive consumer electronics sales as they grow in popularity. Last year, GITEX and Souq.com's White Friday turned out to be two very successful events as they offered attractive offers and discounts to consumers and generated volume growth for retailers. In the future, retailers and manufacturers will likely place a stronger emphasis on omni-channel strategies, while more online campaigns to sell consumer electronics and appliances are expected as e-commerce activity increases in the UAE. The online retail market is definitely a space to watch and it will be interesting to see the changes in consumer attitudes and spending patterns as big players like Amazon.com, Souq.com, and Noon.com adopt new approaches to attract online shoppers across the region. 
Dubai Chamber regularly organises workshops and events designed to strengthen local businesses' understanding of e-commerce trends and opportunities, while it has also formed valuable partnerships to provide our members access to leading platforms that enable them to boost their online presence and expand their global reach. There is no doubt that the future of retail will be digital and reflect a shift among retailers to adopt innovative strategies to attract and retain customers. 
In fact, we are already seeing this trend gain momentum in places like the U.S. where so many traditional stores are closing due to consumers' growing preference for online shopping. Although it may take some time for this trend to be reflected in the UAE given the local shopping culture, it is never too early for retailers to start preparing for this inevitable shift.
Retailers and manufacturers will likely place a stronger emphasis on omni-channel strategies, while more online campaigns to sell consumer electronics and appliances are expected as e-commerce activity increases in the UAE. The online retail market is definitely a space to watch and it will be interesting to see the changes in consumer attitudes and spending patterns as big players like Amazon.com, Souq.com, and Noon.com adopt new approaches to attract online shoppers across the region.