Rising mall rentals driving electronics retailers to e-commerce

Hike in rents by shopping malls are pushing electronics and other retailers to shifting focus to e-commerce in order to increase their revenue and customer base, said a senior official of Dubai-based electronics retailers.

“Shopping malls continue to raise rents. They will be driving online business [if they continued raising rates]. They have to rationalise the rental rates,” said Niranjan Gidwani, Deputy CEO of Eros Group – the distributor of Samsung, Hitachi, TCL and Linksys.

A Dubai property report by classifieds website Dubizzle earlier this month said that there was 62 per cent increase in rental price of commercial retail spaces across the emirate between January and August 2015.

Gidwani was speaking at the launch of the group’s foray into online retail with the launch of a new online shopping portal in order to tap the growing internet and mobile users in the UAE.

The UAE, according to Frost & Sullivan, boasts highest per capita online retail spending on par with the US and the European Union.

Electronic retailers in the UAE are increasingly looking to tap e-commerce to give fillip to their revenues and customers.

Dubai-based electronics retailer Plug-Ins – a unit of Al-Futtaim - is also relaunching its portal in the middle of October to make it more consumer friendly. It was launched in June last year.

Omar Abushaban, General Manager of Plug-Ins, said the company had seen sales growth in just three or four categories, hoping that the relaunch would further lift the growth due to higher active mobile and internet users in the country.

The UAE currently has 92 per cent active internet users, 75 per cent active mobile internet users with nearly 38 per cent of them shop online. Average UAE resident spends over five hours on internet and browses web for nearly 3.45 hours per day through mobile.

According to ArabNet and Global Media Insights, UAE e-commerce market is estimated at $2.5 billion and expected to grow to $10 billion by 2018. Approximately 3.6 million UAE residents are online customers with the lion’s share in Dubai and 27 per cent in Sharjah and Abu Dhabi.

“eCommerce is rapidly expanding in the region due to the increased confidence in online sales and we expect to see this strengthen over the next decade. It goes without saying that peace of mind is of the utmost importance when shopping online… Consumers want simplicity and convenience,” said Deepak Babani, CEO of Eros Group.

Eros Group is initially offering 4-5 brands and will later increase its offerings. The Group operates 33 retail stores across UAE, selling 15 global brands with revenue crossing Dh4.5 billion.

Babani said eCommerce venture is a key component of the company’s growth plan. However, the brick and mortar outlets will also remain key focus of the company.

Eros has tied up with leading local banks for 3 to 12 months of interest-free payment for the online buyers along with free product insurance against accidental damage and burglary.

It also offers cash on delivery option to online purchasers and free shipping within 72 hours to any destination in the UAE on purchase of Dh500 and above.

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