While the rise of e-commerce has led to increased openings of online shops, physical stores continue to be stronger, according to the chief executive of consumer electronics giant Eros Group.
Speaking to Arabian Business, Niranjan Gidwani said the segment accounts for just 5 percent of the total consumer electronics retail business in the UAE, as customers prefer to experience certain products before making a purchase.
“Consumers find it an ideal channel when shopping for smartphones or accessories, but look to traditional channels for appliances and televisions,” he said, adding that the theory that e-commerce is more optimal than brick and mortar has “long been debunked.”
“Logistics costs, returns and other charges make [e-commerce] a costly proposition on par with physical stores. While many traditional retailers are shutting down shops, online players such as Amazon are also opening physical stores,” he added.
While online retail represents a challenge for physical stores, it is only one of many factors affecting sales.
“Market saturation and price planning also play a role. Each retailer will have to find the right path to reach customers. We try to blend the two channels, as we already have a traditional set-up with a well-structured logistics format,” Gidwani noted.
He remains optimistic in the run-up to Dubai Expo 2020, when new residential properties will enter the market and increase the demand for home appliances and entertainment products, particularly in the second half of 2018, when the highest delivery of new residential properties is expected, he said.
The chief executive also said traditional retailers will have to enhance the consumer experience in store through a variety of ways, including hiring younger sales floor personnel and competitive pricing.
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