E-LIFESTYLE SURVEY 2014: Power retail appeals
Gulf consumers prefer to shop their electronic gadgets from power retail stores, ITP.Net survey finds
Gulf consumers prefer to purchase their consumer electronics from electronics megastores like Plug-Ins, Emax or Jacky's than general retail outlets, independent specialist stores or brand stores, Channel Middle East can reveal.
The inaugural ITP.net e-Lifestyle Survey 2014 showed that 46.7% of respondents favoured these kinds of outlets and only 19.78% reported shopping at general retail outlets such as Virgin Megastore, while 11.81% fancied brand stores like Samsung and BlackBerry to buy their electronic goods.
The ITP.net e-Lifestyle Survey was run online during May and early June. The anonymous poll sought to form a picture of how GCC citizens interact with technology at the consumer level, asking questions about preferences, favoured brands, spending patterns and usage habits.
More than half of the respondents (54%) were aged between 21 and 40 and split between 85% male and 15% female. Some 69% lived in the UAE, a further 12% in Saudi Arabia, with the rest spread evenly throughout other Gulf countries.
The survey showed that when Gulf residents get out their wallets to buy electronic goods, their dirhams, dinars and riyals go overwhelmingly to electronics megastores, such as those run by the major power retail chains like Plug-ins, Emax, Jumbo Electronics, Sharaf DG and Jacky's Electronics.
Interestingly, 6.87% favoured domestic online retailers based in their own countries, with 4.40% indicating that they bought their products overseas from online retailers like Amazon.
Ashish Panjabi, chief operating officer at power retailer Jacky's Electronics Group, said: "I'm not particularly surprised because we specialty electronics retailers such as ourselves offer the customer a choice of brands and an environment where they can decide what they want exactly."
Punjabi pointed out that not every customer comes into a store fully sure of what they want to buy and most specialty retailers have spent a lot to improve their in-store customer experience in the last few years. "Having knowledgeable sales staff or demos that you can touch and feel go a long way. In a hypermarket, you may not always get the same experience when buying and in online stores, you get no experience if you don't know what you want to buy exactly," he said.
Jamal Maraqa, managing director, PRO TECHnology agreed and added: "I am not astonished that consumers prefer to buy from power retailers as this trend has been developing in the region due to the consumer confidence the mega electronic stores are gaining in the market. The end-user usually feels that he or she is getting the best deal without negotiation and getting good support and service."
Remarking on the slow uptake of e-tailing models, Punjabi said critical mass and e-tail legislation was hampering the rapid acceptance of this business model as a preferred platform to purchase electronic goods across the region.
He explained that the addressable market in the UAE is about four million people (eight million people being the approximate country's population and discount about half as labour class or low-income workers). He added that in Bahrain, Qatar and Kuwait the addressable market is even smaller. "The way the laws in this region work, is that if you ship a product from UAE to Kuwait for example and fraud is reported, you have no legal recourse as the seller based in the UAE to the customer based in Kuwait," he said. "You end up losing the goods and the money you were due to receive. Therefore, you either have to setup a legal entity in each country you operate or restrict yourself to operating in the country you have your legal entity."
Punjabi said comparing such a scenario to say a seller based in France who can sell into Germany and is protected by EU law or a seller based in California who can ship to Kansas and is protected by US Federal laws.
He added that the power retail sector has continued to gain wider appeal from consumers because it has fairly competitive offers whether it is discounts, bundle offers or gift vouchers. "We've seen a fairly competitive retail landscape in the UAE. This is unlike Europe or the US where retailers may be slow to react," he said.
Another factor according to Punjabi, is that most power retailers in the UAE benefit from tourist traffic that buys from them and that's something e-tailers may struggle to get a share of.
While the survey confirms a trend that has seen high street independent specialist electronics stores struggle to attract customers, Maraqa is of the view that they should work hard on developing and introducing more services and additional value to differentiate themselves from power retailers. "This will convince consumers and SMBs to buy from them due to better customer experiences, solid after-sales support and overall value," Maraqa said.
Punjabi concurred and reiterated that the high street will remain a struggle as more traffic moves into shopping malls. "We were once a high street retailer and started moving into malls back in 2002. Since then we've become a mall-based retailer primarily. The only thing I can see that can work for a high street retailer is to ensure they're in a high traffic area such as near a Metro station where there is some natural footfall they can benefit from," Punjabi said.
When asked about their favoured brand when buying a tablet, smartphone or PC, the research found that Apple is a hugely popular brand in the region when it comes to smartphones. While Samsung holds around 31% of the global market in smartphones and its rival Apple has 15% (Q1 IDC figures), Apple has, according to the survey, won disproportionately more fans in the GCC. Some 36.81% of respondents said they preferred Apple when buying a smartphone, while only 35.44% favoured the global market leader Samsung.
Punjabi pointed out that Apple and Samsung still have the lion's share of the tablet market but the market has seen Lenovo emerge as a number three player. "The OEMs also have come back with better products this year but we're waiting to see how newer products like the Surface Pro 3 do over here when officially launched," he said.
He said in the smartphone sector, the leader at the moment is Samsung, followed by Apple and Nokia. "We've seen the market grow quite dramatically this year for Lenovo and Huawei as well, especially in the lower-end and mid-market of the smartphone segment. BlackBerry is the brand that probably suffered the most this year," he noted.
When it came to computers, the global PC market was slightly more aligned with survey responses. According to Gartner Inc, the Q1 standings were Lenovo at 16.9%, HP at 16% and Dell at 12.5. Those polled were tightly coupled with Lenovo's world performance (16.76% favoured the Chinese vendor when buying a PC), but HP won 21.98% of Gulf hearts while also did better in the region with 17.03%. However, Apple again stood out disproportionately in this market, winning the favour of 15.38% of GCC residents despite only commanding about 8% of the global market.