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Sale of appliances to go up in ME

BY OUR BUSINESS BUREAU

The strong growth of Middle East economies at a rate of 6.5% annually is fueled mainly by the continuing high oil and nonoil commodity prices, ensuring that the combined GDP’s of the GCC economies together with Egypt and Jordan will cross $1,045 billion in 2008, thereby sustaining the region’s demand for white goods and consumer electronics, according to industry research.

“The strong economic growth is also intensified by the real estate boom across countries in the Middle East that continues unabated and translates into huge opportunity for appliance manufacturers,” said Eckhard Pruy, CEO of Epoc Messe Frankfurt, organisers of International CES/hometech. Pruy noted that: “Given the urge to splurge in the region appliance manufacturers can expect to boost their sales volumes in 2008.”

International CES/hometech Middle East that is to be held from May 25-27,2008 at the Dubai International Convention and Exhibition Centre, is a successful platform for the Gulf States, the wider Middle East, North and East Africa, the CIS and the Indian Subcontinent, to source the latest in home technology, home entertainment, home automation, home appliances and domestic devices

He added that “In the Gulf Cooperation Council (GCC) countries, investment spending will expand to at least $800 billion over the next five years, with major projects in the oil and gas sectors, infrastructure, and real estate.”

Morgan Stanley estimates that GDP for the GCC plus Egypt and Jordan will reach $1,045 billion in 2008, more than twice the 2002 figure of $484 billion.

“Industry estimates reveal that, due to the unabated growth in real estate development and spending across the Middle East, the volume of new office space in Dubai will increase from 1.6 million m2 presently to 5.6 million m2 in 2009,’ said Mehtap Kenar, Senior Show Manager, International CES/hometech. “Construction of huge new megamalls and expansion of the current megamalls are also planned. Similarly, in Doha, capital and port city in Qatar, more than 16,000 new apartments will be available by 2010, while retail space availability is also set to increase - from 450,000 to 1.13 million m2 between 2007 and 2012. Riyadh is also witnessing huge investments in retail space.”

The UAE and Dubai in particular, is among the leading markets for consumer electronics products in the Middle East. Dubai also features as the prime distribution centre for regional electronics sales. Industry analysts believe the surge in sales of electronics products in and through Dubai is due to competitive prices.

With diversification of import sources and introduction of new products, huge demand in the Middle East has arisen, giving a new dimension to the scale of supply required.

Gulf Today

One-dirham’ outlets mull price hike
By Asma Ali Zain (Our staff reporter)

26 April 2008
DUBAI — One dirham may soon not be the minimum price for a number of goods available at the hugely popular low-cost stores as skyrocketing costs have to be adjusted, say people involved.

Commonly known as ‘one dirham’ or ‘10 dirham’ outlets, the shops are extremely popular among shoppers looking for good bargains. Prices of goods being sold at the outlets range from between Dh1 to a maximum of Dh5 in one-dirham store, and from Dh10 to Dh20 maximum at 10 dirham stores.

“The shops offer goods that are affordable by all, though I agree that the quality may not be extraordinary. Still, there are many items we need in our daily lives that need not be necessarily be expensive,” opined Mariama B, a regular shopper.

Expressing concern over the possibility of price increase, she added, “Nothing is really cheap now anymore. Still there is a major chunk of the population that visits these stores to hunt for good bargains. If they, too, are considering increasing prices, then I would prefer to visit a regular store to at least get a better quality for the same price,” she added.

However, Mohammed Saleh Ibrahimi, Manager of Two Dirhams Centre in Sharjah says, “We are currently studying the market and we do expect an increase as our import prices and factory charges have gone up. But, in the end, we do not want to upset our customers.”

Stationery, school items and soaps might be affected by the price increase as they are currently being sold for Dh1. The minimum prices may be fixed at Dh2 instead. “However for goods being sold for Dh5, we may not change the prices, but instead settle for a lower profit margin,” explains Ibrahimi.

Likewise, Izaad, Manager of Day to Day Centre in Dubai expects that the rising shipping costs may lead to shortage of goods available for Dh1. “We cannot change the selling style of our stores and we have a dedicated customer base. So, we are still studying the market and expect that we may lose the profit margin by 10 per cent,” he explained.

Raza Abbas, a shopper opined that the stores may resort to selling goods of even lower quality to offset the increasing costs. “The goods may be of cheaper quality. But even if they consider increasing the price by one dirham, people will not stop buying,” he said.

Most stores import items from Thailand, Iran, Indonesia, China and India.

A manager of Gift Market in Sharjah, who did not wish to be named, also said that profit margins had dipped. “This has affected all markets, not only us. We are watching the market and might consider an increase later,” he added.

They all, however, said that the price increase would not affect the pockets of the customers. “Customers need to buy. Though business may be reduced for a while, it will pick-up slowly again,” they add.