Pumping on the stereo

Leveraging its experience in the US and European markets, home audio specialist Bose is expanding its retail presence and product portfolio in the Middle East in a bid to tap consumer demand for premium home audio solutions.

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By  Ronan Shields Published  December 31, 2006

Founded in 1964 by Dr Amar Bose, Bose’s presence in the Middle East presently consists of 75 Bose-branded stores which stock a 30-strong consumer electronics portfolio including the company’s lifestyle, multimedia and personal audio headset ranges.

The US-based consumer electronics and home entertainment vendor exported its first consignment of goods to the Middle East in the late-1970s. It recently earmarked the region as a key market in its global expansion strategy.

“The company has identified the Middle East as one of its major priorities commercially,” says Amit Gera, Bose area manager for the Middle East.

“We have achieved double-digit growth in the Middle East for the last four years.”

Bose’s Asia Pacific division oversees its Middle East and African operations. The company identifies the Middle East and Africa as the most lucrative territories in this regional portfolio.

It maintains that the combined markets account for almost 50% of its annual turnover, outstripping the performance of its Australian and Far Eastern operations.

Bose’s office in Dubai’s Jebel Ali Free Zone (JAFZ) serves as the hub for the company’s regional operations.

With this office servicing more than 45 markets, the company employs Dubai-based logistics specialist, Modern Freight Company (MFC), to ship stock to its regional channel partners.

According to Michael Guest, business manager, professional systems division for Bose Asia Pacific, the establishment of the JAFZ office has enabled the company to tap new markets in the region, particularly the hospitality and high-end home audio sectors.

“We have made significant gains as a result of the rapidly evolving dynamics of markets such as Dubai,” he says.

“Our office in JAFZ serves as a base for providing improved support to our channel partners, while providing us with the resources to tap new industry and consumer sectors.”

Guest says that Bose is looking to relatively untapped markets such as Bahrain and Qatar to spur its growth in the region.

“Countries such as Qatar and Bahrain have followed Dubai’s example in terms of offering major commercial incentives to big business,” he explains.

“We are eager to capitalise on the opportunities available in these markets as they are likely to emulate the economic success of Dubai in the near future.”

“We are encouraging our retail partners in Bahrain and Qatar [Modern Home and Ashraf respectively] to expand our presence in both markets,” adds John Dodson, Bose general manager for the Middle East and Africa.

Gera says the company has also locked its sights on the UAE’s booming consumer electronics market, which is witnessing strong demand for high-end home audio products as a result of the strong growth in the freehold property market.

“Developments in the country’s freehold property sector will have a major effect on our business strategy over the next few years as we anticipate consumers will want to furnish their homes with premium quality home audio products,” says Gera.

“We anticipate that our home entertainment product division will achieve exponential growth in the UAE in the coming years, as a result of the country’s rapid population growth and flourishing freehold property market.”

Gera claims that fostering close relationships with channel partners in the Middle East is vital to success in the region.

“We are very precise in terms of the expectations we place on our channel partners,” he says.

“We’ve been dealing with the same distributors since we first established a presence in the Middle East.

“In terms of criteria for working with new partners, we look to do business with companies that share our vision and are willing to work hard to identify new opportunities in the marketplace.

“Our channel partners rely on us to provide various support mechanisms such as training and after-sales service. On the other hand, we rely on them to implement the commercial strategies we develop for each particular market.”

Bose markets its entry-level and mid-range product portfolio through a limited number of power retailer outlets, which yields it significant financial returns, according to Dodson.

“This move has enabled us to alter misconceptions about the Bose brand,” he says.

“Many consumers had previously considered Bose as an exclusive brand that was financially out of reach.”

Bose is looking to capitalise on this strategy by adding E-max and Sharaf DG to its list of UAE-based retail partners as well as increasing its display space in Plug- Ins Electronix outlets.

“Our products should be available in E-max and Sharaf DG sometime this quarter,” explains Gera.

He adds that Bose’s partnership with Plug-Ins has provided it with access to a previously untapped sector of the consumer market.

“The arrangement also enables us to concentrate on marketing our premium products through the Bosebranded retail chain,” he says.

The opening of Bose’s first mall-based retail outlet in Dubai’s Mall of the Emirates in December 2005, marked a distinct shift in the company’s strategy away from high street retailing in the Middle East.

“We are focusing heavily on expanding our mallbased retail presence. This is in response to the changing dynamics and relative growth of the consumer electronics market in the UAE,” says Gera.

“We currently operate around 35 mall-based retail outlets in the GCC and plan to increase this number in the near future.”

Gera also reports that Bose’s mall-based showrooms generate significantly greater levels of turnover and profit than its standalone outlets.

“Our marketing pitch is ‘to be better, to be different’.

We believe that mall-based shopping outlets provide a perfect opportunity to showcase our product range to the mass market,” he says.

“The move away from high street retailing reflects the growing maturity and dynamism of the Middle East’s consumer market.”

Bose aims to fuse its retail and product operations to bolster its profile in the mid-to high-end segment of the consumer market.

“The mall-based outlets are fundamental to Bose’s regional expansion strategy as the potential reach of the outlets is huge,” claims Dodson.

“They also feature a common store design that reflect the high performance, elegance and simplicity that is synonomous with the Bose brand.”

Bose will soon expand its mall-based operations with the opening of stores in the UAE, Oman, Saudi Arabia and Kuwait, as well as four additional outlets in Lebanon before the end of 2007.

Gera reports that the growing sophistication of the UAE market, combined with the changing profile of the Middle East’s consumers, will benefit premium brands as the company’s analysis of consumer behaviour reveals a strong demand for high-end products.

“With so many new technologies entering the market, many consumers remain cautious about buying new products that they have little knowledge about,” he claims.

“We believe that our branded stores provide an ideal platform to target these consumers.

“Our professionally trained sales staff are on hand to demonstrate to consumers the benefits of our products, particularly given their high-end nature and emphasis on technical excellence.

We believe that providing our customers with quality sales and service support reflects the premium nature of our product portfolio.”

Dodson reports that the nature of Bose’s retail strategy also insulates it from potentially adverse fluctuations in consumer demand and slim profit margins that often impact rival retailers in the region.

“The Bose-branded outlets are managed, and paid for, by our channel partners. This means our involvement in the mall-based operations remains limited to a consultancy role,” he explains.

Dodson claims that by positioning Bose as a premium brand, the company also insulates itself from the price wars that often impact other sectors of the Middle East consumer electronics retail market.

“While the economic threat of low-cost brands can never be underestimated, the fact our brand is pitched at a target consumer base protects our business to a certain degree,” says Gera

“We believe this competition is healthy, because it reflects the overall buoyancy of the marketplace.

“We also feel that this competition reflects increased consumer demand for consumer electronics products that will benefit companies such as ours, given that our branded stores stock products which are targeted towards consumers with a large disposable income. “

With a raft of product launches scheduled for the first quarter of 2007, Dodson believes that Bose’s business in key markets should enable it to reinvest in developing its business in smaller markets across the region.

“We are confident that our strategy of rolling out high-end products in mature markets such as the UAE will enable us to sustain a healthy rate of growth across the entire region,” he says.

“We are focusing on expanding our small-form ‘lifestyle’ product portfolio in response to consumer demand for quality sound performance from products characterised by their compact design.
“The growing popularity of the Bose brand among music lovers has been enhanced by our continued development of products that place a strong emphasis on quality, sound performance and aesthetic design.”

Bose corporation facts

Founder and chairman:

Dr Amar G Bose.

Regional headquarters:

Jebel Ali Free Zone, Dubai, UAE.

Product categories:

Headphone, lifestyle, multimedia, professional systems.

Biggest selling product line:

SL2 wireless surround link, Acoustic Wave music system II, Bose on-ear headphones, Companion multimedia speaker system.

Regional distribution partners:

Universal Applications, Modern Home, Ashraf, OHI

"Our channel partners rely on us to provide various support mechanisms such as training and after-sales service… we rely on them to implement the commercial strategies we develop for each particular market." Amit Gera, Bose area manager for the Middle East.

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