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Is Covid-19 a blessing in disguise for consumer electronics sales in UAE?

(Image credit: Future)

The remote work and e-learning initiatives to help slow the spread of the coronavirus are giving rise to an unprecedented surge in online consumer electronics sales in March in the UAE, retailers, vendors and analysts said.

Performance at electronics retailers is hinting at benefits from the shift in work culture despite weak consumer confidence at the start of the year.

Governments, students and enterprises have been advising people to stay safe indoors and that has helped increased sales in PCs, TVs, gaming consoles and small appliances.

Ashish Panjabi, COO at Jacky’s Business Solutions and Board Member at Dubai Computer Group, said that sales of PCs and TVs have been better.

 “There were three waves – e-learning, the government sector’s work from home and enterprises’ work from home initiatives. These three waves together happened in March but the biggest issue was supply chain as the surge in demand was not predicted,” he said.

Till the stores were opened, Panjabi said that laptop sales were excellent and later shifted to online when stores were closed.

However, he said that there was a sudden spike in TV sales as more people are watching Netflix by sitting at home.

Jacky’s online PC sales were up by about four times in March when compared to February.

Paul Collins, General Manager for Middle East at Acer, said that March has been good for the company in the UAE.

“We have different demographics in the country, so different people buy PCs in different price segments. Sales at Carrefour, LuLu and Amazon have almost tripled from the shift in work culture in March. More entry-level laptops are depleted and now we are seeing a demand for high-end thin and light laptops,’ he said.

However, he said that Acer is not facing any shortage of supplies and “we are strategically placed and get regular shipments from China and Taiwan. Our factories in China, which are at 80% production currently, are two weeks away from running at 100%. Getting products into the country is not an issue”.

“We do not know how long the impact of Coronavirus outbreak will last. People had moved their buying behaviour from stores to online in the last four weeks,” Collins said.

As people work from home and distant learning is gaining traction, he said that there is a strong uptake for Chromebooks and gaming PCs and it will play into Acer’s hands.

Building small offices at home

“We will continue to see upgrades of devices from corporates and SMBs due to the expiry of Windows 7 OS support but upgrades from the consumer sector are going to be slow unless they realise the benefits of latest OS,” Collins said.

The support for Windows 7 OS ended on January 14 this year.

Isam Arshad, Research Analyst at Euromonitor International, said people are buying electronics to entertain themselves at home but this would be for the first quarter of the year.

“These were postponed sales and Covid-19 allowed people to buy things. People are building small offices at home. After the second and third quarter, there would be a decline in sales with economic uncertainty going on. However, by the end of the year, there would be a decline but it is too early to predict the impact of Covid-19,” he said.

Forecasting the Expo 2020 event, the total value of consumer electronics industry in the UAE, according to Euromonitor, is expected to grow by 9.59% to AED16b this year compared to AED14.6b last year while 22% of it was expected to come from online sales.

However, he said the Covid-19 outbreak is likely to dip the electronics shipments over a period but giving rise to online sales.

“At the moment, nobody can predict for certain how long this crisis will last, but as social distancing measures become more stringent, so does the demand for mature products such as laptops and desktops for home office setups,” he said.

Moreover, he said that online sales are expected to grow by 40% year on year in the first quarter and continue the upward trend until May but the supply chain is not able to meet the demand as the delivery of online orders is getting delayed.

Spending on premium smartphones takes hit

Pankaj Kumar, Head of Omnichannel Retail at Jumbo Electronics, said that offline sales have taken a hit but online sales have increased.

“We are seeing good sales in PCs, small appliances (vacuum cleaners, air purifiers), TVs, gaming consoles and audio products, expect imaging and mobile phones. Ever since the shutdown of schools and remote work, IT has been doing well,” he said.

In March, he said the increase in PC sales has been around 20% compared to February and the fastest-growing category, both in online and offline sales.

“There were supply issues with HP due to Intel chips for the last three months but we made it through with Lenovo, Acer and Asus PCs. Even though HP has shifted to AMD chips, it could not offset the supply issues,” he said.

Jumbo has seen a growth of more than 200% in its online business.

“However, our online business used to be only 10% of our total business but due to the closure of malls and shops, online sales have picked up to about 16%. In March, online sales have increased more than 75% compared to February,” he said.

Moreover, he said that gaming consoles have suddenly seen an increase despite people waiting for the launch of next-generation devices.

Jacky’s and Jumbo said that they have inventories to meet one month’s demand.

Taking the effects of Covid-19, Arshad said that consumers are expected to avoid spending on premium-priced smartphones and would remain to medium pricing range which enables them to stay in touch during the period of social distancing with each other.

As uncertainty grows further, he said that spending on the staple and basic goods would increase.