19 October 2016

Dubai consumer electronics market to be worth over US$3 billion by 2020

A Dubai Chamber of Commerce and Industry (DCCI) analysis, released during GITEX Technology Week 2016, has predicted that the Dubai consumer electronics market will grow at 4.7% over the next four years to exceed US$3 billion by 2020.

The analysis highlights Dubai’s growing retail sales activity despite mounting pressure from low oil prices and rising global economic uncertainty. Such resilience is attributed to solid fundamentals that include rising population and incomes together with a steady influx of tourists to the emirate. Dubai’s young population in particular is interested in technological developments and keep up to date with the latest innovations. In addition, many consumers see electronic gadgets such as smartphones, tablets and smart watches as status symbols.

According to the report, based on latest UAE retail sales data from Euromonitor, the portable consumer electronics subcategory is expected to keep its lead with a 2020 sales forecast of US$1.27 billion. The computers and peripherals subcategory is to retain its size at US$937 million, while in-home consumer electronics is expected to hit US$900 million. The in-car entertainment subcategory will remain flat however, with a sales forecast of US$23 million.

In terms of future growth, in-home consumer electronics has a CAGR forecast of 7.6% between 2015 and 2020, while portable consumer electronics is in next place with a CAGR of 6.4%. Growth is set to cool off in the computer and peripherals subcategory with a CAGR forecast of 0.9%; while in-car entertainment is expected to have a CAGR of 0.7% over the forecast period.

The analysis estimates Dubai’s consumer electronics market size in 2015 at US$2.4 billion after effectively expanding at a CAGR of 8.9% over the past five years.
Source: DCCI, Dubai Statistics Centre, Euromonitor. Dubai consumer electronics market size (US$ billion)

Total sales for the category stems from portable consumer electronics (US$930 million), computers and peripherals (US$902 million), in-home consumer electronics (US$621 million) and in-car entertainment (US$22 million).

In terms of growth, in-home consumer electronics has led the four sub-categories with a CAGR of 17% between 2010 and 2015, while computers and peripherals followed with a CAGR of 6.9%, and portable personal electronics came in third with a CAGR of 6.8%. In-car entertainment shrank at a negative CAGR of -3.5% over the same period.

Market observers indicate that the main trend seen last year in consumer electronics sales is the gradual move towards more compact and multifunctional devices, especially those that offer Internet connectivity. Tablets and smartphones enjoyed solid growth in sales. However, the increasing quality, processing power, and range of applications offered by these devices are taking market share from other items, such as digital cameras, portable MP3 players, digital video disc (DVD) players, laptops and desktops.

Dubai’s electronics and appliance specialist retailers continue to be the leading channel in consumer electronics as they have a wide product selection and price range, and can offer expert advice and tailored recommendations.

Consumer electronics distribution breakdown (%)
Outlets (% share in sales) 20102015% change
Store-Based Retailing
Electronics and appliance specialist retailers46.743.7-6.4%
Mixed retailers6.22.0-67.7%
Other non-grocery specialists11.18.4-24.3%
Non-store retailing
Internet retail3.13.5+12.9%
Source: DCCI, Euromonitor

It is worth noting that the number of electronics and appliance specialist retailer outlets is strongly linked with the opening of new malls and shopping centres. At the same time, leading hypermarket chains such as Carrefour and Lulu are offering wide product ranges at very reasonable prices.

The strong presence of shopping malls in the emirate has limited the size of the Internet retailing market. However, store-based electronics retailers are realising a complementary Internet retailing site is becoming increasingly important to drive sales of consumer electronics to their physical stores, with many consumers checking prices and models online before or during shopping trips.

Another subcategory, home audio and cinema, has benefited greatly from the residents’ frequent purchases and product upgrades. Sales volumes rose by 16% last year despite high price tags. A similar growth rate is seen in sales of smart TVs, which gained in popularity at the expense of a -28% decline in demand for conventional TVs.