Technology sector sales to hit $37bn in 2008

Trends in the 119 million-strong Middle East consumer market indicate that the sales forecast of $37 billion (Dh135.7bn) in consumer electronics and retail technology sector will be met by the end of the year.

According to a study carried out by GfK-MEMRB Marketing Services, the Dubai-based subsidiary of one of the largest market research firms in the world, the regional consumer market will witness growth despite the global slowdown.

The study also predicts the total market for consumer electronic and technology products to grow to $39-$40bn in 2009. It covered markets in the UAE, Bahrain, Egypt, Iran, Jordan, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Sudan, Syria and Yemen.

The digital consumer technology sector alone is expected to see retail sales in excess of $24bn by the end of 2008. "Whatever the effect of the global slowdown, we are anticipating continued regional growth in this sector for the full year of 2008 at 9.6 per cent compared with last year," said Franck Thureau, General Manager of GfK-MEMRB.

"Innovation is clearly leading the continued growth of the digital consumer technology market and it is now running ahead of the fast moving consumer goods market in general," Thureau said. "We expect that trend to continue in the Middle East in 2009, whatever worldwide concerns are around. For the digital sector, we forecast $25.6bn for 2009 – a growth rate of 6.6 per cent."

The study said the main growth contributors will be LCD and plasma TV products with $ 2.2bn additional revenue expected. Second comes the personal computer business with added revenue of $600 million and thirdly monitors at $290m.

The dominant digital product category remains mobile and smart phones with a total of $10bn in sales expected for 2008 – a full 41 per cent of the entire digital consumer market.

"The fact is that the mobile phone is a status symbol for many consumers in the Middle East and they do not hesitate to change their mobile phones every six months or so," said Thureau.

High resolution cameras, MP3, Bluetooth, touch screens and new mobile phone operating systems are all driving growth, he added.

The second digital product category is desktop, laptop and notebook computers with a market value of $5bn. Third comes LCD TVs with a market of $4bn in 2008. Growth is exponential in all Middle East countries, notably in the UAE, Saudi Arabia and Iran.

In the UAE, independent retailers still lead with a 60 per cent market share in volume for major product categories such as LCD TVs, digital cameras, mobiles and smart phones, reported the study. However, big key-account retailers like Sharaf DG, Plug-Ins, Emax, Virgin, CompuMe, Axiom, I2, Cellucom, Carrefour, Geant, Lulu and Panda are making heavy inroads into the market.

"These superstore retailers have a 40 per cent market share of product sales with 250 outlets in the UAE," said Thureau, adding: "Shopping malls are their base for expansion. For example, the recently-opened Dubai Mall already has 23 new consumer technology outlets, contributing to a total of 90 outlets in shopping malls across Dubai alone."

The study showed that the home theatre business is running well and contributing 48 per cent of the audio home system market.

In addition, sales of products with a unit price of $400 or more represented 19 per cent of the sales volume in September. In the digital media player market, MP4 has now taken half the market volume and 73 per cent of market value with consumers increasingly downloading videos as well as music. Digital reflex cameras now make up three per cent of the market in volume and 12 per cent in value. The 12 mega pixel cameras are providing consumers with a high quality of image and their market share in the compact camera sector is already six per cent in volume. The leading segments are seven (41 per cent) and eight mega pixel (31 per cent).

GfK's market estimate for retail business of major and small domestic appliances and air-conditioning is $12.5bn. The value of the refrigerator market is expected to reach $3.7bn in 2008 with sales of more than five million units. Up and down fridge-freezers dominate with 70 per cent of the regional market and bigger models drive the market.


The highlights

-The 65 per cent of sales are of digital consumer technology products such as notebook and laptop computers, cameras and mobile phones.

-Independent retailers hold most of the Middle East market but are heavily challenged by electronic and technology superstores such as Sharaf-DG, Emax and Axiom.

-Mobile and smart phones with 2008 sales of $10bn make up 41 per cent of the digital consumer market

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