UAE brick and mortar will continue to be stronger than e-commerce

Niranjan Gidwani, Chief Executive, Eros Group said e-commerce accounts for just five percent of the total consumer electronics retail business in the UAE
Niranjan Gidwani, Chief Executive, Eros Group
By Niranjan Gidwani, Chief Executive, Eros Group
Sun 07 Jan 2018 04:44 PM

The consumer electronics boom is an ongoing phenomenon as new technologies such as Virtual Reality (VR), fitness trackers and drones evolve and boost the industry, writes Niranjan Gidwani, Chief Executive, Eros Group.

The major challenge, however, is in the decreasing shelf life and cost of older technologies including televisions and smartphones, as new forms are being introduced at a much faster pace. For example, in an under a decade, television technology moved from LCD to LED to 3D to OLED. We have tried to overcome this by better forecasting, stocking, marketing and distributing new products to make sure we get them to our customers faster.

More importantly, while e-commerce has created a lot of buzz, and we have launched our own online shopping platform, the segment accounts for just five percent of the total consumer electronics retail business in the UAE. Consumers find it an ideal channel when shopping for smartphones or accessories, but look to traditional channels for appliances and televisions. They want to experience certain products before making a purchase.

To solve this, retailers will have to find a way to enhance the consumer experience in store, through ways such as younger shop floor personnel and improved pricing.

The theory that  e-commerce is more optimal than brick and mortar has long been debunked, as logistics costs, returns and other charges make it 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.

Although the global e-commerce business is estimated to be $2.5tn in 2018, it will still account for just 10 percent of the overall retail market. The physical channel makes up 90 percent of the business.

So it does face challenges, but online retail is not the only factor 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.

As new residential properties enter the market in the run up to Expo2020, the demand for home appliances and entertainment products will also grow, especially in the second half of 2018, when the highest delivery of new residential properties is expected.

The Internet of Things (IOT) and Artificial Intelligence (AI) will be the major trends to look out for, though they are yet to make their presence felt due to format, bandwidth and security issues, but I see this getting resolved in the near future.

Intelligent smart homes should also soon be a reality in the UAE. Meanwhile, we have made investments in solar technologies such as LED Lighting, and see the category growing and becoming a significant contributor to our bottom line next year.

Overall, the best in technology is yet to come. The next big idea is just around the corner. We will see some major changes in the lifestyle space as the post millennial generation, the most digitally-connected one, enters the workforce in 2018.

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Last Updated: Sun 07 Jan 2018 07:02 PM GST

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