Bahrain enhances IT prospects

Bahrain is often assumed to be a land of limited opportunity for the IT masses, but rapid growth in a number of key sectors is beginning to explode this perception in dramatic fashion. It is also leading to a level of self-sufficiency among locally based entities that can only bode well for the enduring health of the domestic market.

Times are changing in the Bahrain market and nowhere is this more evident than in the consumer channel, where soaring demand for IT and electronics, and the obvious consequences of a rising population, are continuing to redefine the retail model. In a short space of time Bahrain has seen the retail landscape receive a makeover of epic proportions.

 

If you looked at the Bahrain market a year or two ago you would have seen two major outlets - Geant and Home Electronics," explained Ali Mohammad Akbar Khan, general manager at Mars IT Distribution.

"Now there is Plug-Ins, Emax, which has two outlets - a big box outlet and an electronics store - and in the next three months there are two major names coming into the market in the shape of Carrefour and Sharaf DG. Both of these companies have already started negotiations with suppliers."

Given such seismic events, it is no exaggeration when retail pundits say the sector has been turned on its head. "The dynamics are shifting quite dramatically in the channel," admitted Sanjeev Awasthi, general manager at AJM Kooheji & Sons, the authorised distributor for LG products in Bahrain. "It used to be that 20% of business was done through the hypermarkets, 40% through the showrooms and 40% through dealers. Now the power retailers and hypermarkets have 50% of the market."

Awasthi says that AJM Kooheji is combating these changes by converting at least one of its showrooms into an IT-focused LG concept store and making the most of the exclusivity it enjoys to drive its status as the superior destination for all LG branded products. "On top of that we are looking at the possibility of having a multi-brand IT business because footfall is converging and consumers are demanding choice," revealed Awasthi.

Mars IT, traditionally a distribution firm, has also muscled in on the retail act by developing its own string of showrooms. And while it admits certain accessory vendors are taking a pounding from the fact that many mobile PCs are now bundled with features such as webcams and free carry bags, it maintains the good times are here to stay.

These days retail products in Bahrain are growing strongly and you can make a decent margin on them," maintained Khan. "Brands such as Nash Gulf and Creative are really doing well at the moment," he added.

The spike in consumer products is naturally having positive implications for the distribution channel, which has the task of ensuring retail players aggressively targeting the market are given the allocations they require.

Such is the demand for speed and service that hypermarket Geant is purported to have taken the step of only sourcing IT products locally rather than going through Dubai. "They want to see sub-distributors with local stock who can take care of things like RMA issues," explained one player familiar with the situation.

Such developments also give ammunition to local IT providers that feel adequate in-country vendor support is still lacking. "I would urge vendors to consider Bahrain as its own region," declared Khan. "Redington, Jumbo and Emitac are still doing a lot of business in Bahrain and they have staff here, but vendors must also give Bahrain independent country recognition."

That said, the numbers don't always stack up favourably, meaning many vendors still consider it more feasible to address Bahrain remotely. With an IT market worth just US$300m a year, it is not difficult to see the logic in flying business development managers in and out on a frequent basis, rather than maintaining a heavily-staffed office.

"We have distributors and can manage relationships through them, but we are constantly increasing the number of in-country people," said Khalid Khan, SME manager at Avaya, which sells through carrier Batelco and Fakhro Electronics in the Bahrain market. "We have now opened satellite offices in Oman and Kuwait too, and this means that Bahrain in particular can call on the resources of the Kuwait office," he explained.

Although Dubai-based distributors retain a strong influence over the Bahraini channel, local sub-distribution outfits remain a vital component of the supply chain, providing credit to resellers and operating in much the same way as an in-country distributor but without direct vendor contracts.