Middle East consumer technology sales to hit $37bn

A new study by GfK Retail and Technology in the Middle East (GfK-MEMRB Marketing Services) presented at the GfK Consumer Technology Middle East Conference 2008 on the 27th November in Dubai shows regional consumers resilient to global slowdown; the market is forecast to grow to $40 billion in 2009.

The Middle East consumer electronics and technology sector is proving resilient to the global slowdown with retail sales forecast to end 2008 on a $37 billion high and set to reach $39-$40 billion in 2009, according to a study from GfK.

The uniquely detailed study also shows:

• 65% 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 Electronics and Technology Superstores.
• Mobile and Smart Phones with 2008 sales of $10 billion make up 41% of the entire digital consumer market in the Middle East.

"Consumer technology products are clearly proving to be a key component of a higher quality of life for many in the Arabian Gulf," Franck Thureau, General Manager of GfK-MEMRB, explained at the GfK Consumer Technology Middle East Conference.

The conference was called to examine trends in the 119 million regional consumer market and to reveal details of the study which covers Bahrain, Egypt, Iran, Jordan, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Sudan, Syria, the United Arab Emirates and Yemen.

The digital consumer technology sector alone is expected to see retail sales in excess of $24 billion by the end of 2008. "Whatever the effect of the global slowdown, we are anticipating continued regional growth in this sector for the total year 2008 of 9.6% compared with the same period last year," said Thureau.

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

The dominant digital product category remains Mobile and Smart Phones with a total of $10 billion in sales expected for 2008 – a full 41% 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 mobiles every six months or so," Thureau said. "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 $5 billion. Third comes LCD TVs with a market of $4 billion in 2008. Growth is exponential in all Middle East countries, notably in the UAE, Saudi Arabia and Iran.

For the first time in the region, the GfK-MEMRB Marketing Services study reveals details of market structure by channel. In the UAE, for example, independent retailers still lead with a 60% market share in volume for major product categories such as LCD TVs, Digital Cameras, Mobile and Smart Phones. But large retailers are making heavy inroads into the market.

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

The GfK-MEMRB study also reveals that Iranians favour bigger screen LCD TVs than the rest of the region.

"Like everywhere else in the world, the leading screen size in the region is 32 inches, representing 45% of the volume," Thureau said. "However, in Iran the segment only occupies 33% of the market. Families in Iran want even larger screens and LCD TVs of 46 inches or more account for 18% of sales in a market estimated at 600 000 units in 2008. This compares with a market share for similar sizes of only 4% in the UAE or 9% in Saudi Arabia.

The study shows that the Home Theatre business is running well and contributing 48% of the Audio Home System market. In addition, sales of products with a unit price of $400 or more represented 19% of the sales volume in September. In the Digital Media Player market, MP4 has now taken half the market volume and 73% of market value with consumers increasingly downloading videos as well as music.

Digital Reflex Cameras now make up 3% of the market in volume for 12% in value. The 12 mega pixel Cameras are providing consumers with a high quality image and their market share in the compact camera sector is already 6% in volume. The leading segments are 7 mega pixel (41%) and 8 mega pixel (31%) Cameras.

"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 into 2009, whatever worldwide concerns are around. For the digital sector alone, we are forecasting $25.6 billion for 2009 – a growth rate of 6.6%.”

The GfK Retail and Technology sector of the GfK Group is also the sole monitor in the Middle East of Major and Small Domestic Appliances. GfK’s total market estimate for retail business in this region is $12.5 billion.

The total value of the Refrigerator market is expected to reach $3.7 billion in 2008 with sales of more than five million units. Combi Fridge-Freezers dominate with 70% of the Middle East market and bigger models of 600 litres or more drive the market. The Iran market is again different to others with Iranian families preferring Side-by-Side Door Fridge-Freezers which make up 27% of the market by volume and 50% by value.