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Sunday, 20 October 2013

Consumer Appliances in the United Arab Emirates Research Proposal Topics


Dissertation Writing Help on Consumer Appliances in the United Arab Emirates Research Proposal Topics


Project Report on Consumer Appliances in the United Arab Emirates, UAE

Case Study on Consumer Appliances in the United Arab Emirates Research Proposal Topics


EXECUTIVE SUMMARY
Growth for major appliances slowed by economic downturn
Sales of major appliances saw striking growth in the early part of the review period, as strong economic growth in the United Arab Emirates encouraged consumers to buy a wider range of these products and to make more frequent replacement purchases and upgrades. The economic downturn however hit consumer economic confidence hard in the last two years of the review period. Consequently, many consumers sought to cut back and growth rates for major appliances plummeted as consumers postponed higher-priced purchases.
Overall volume growth maintained by bargains in small appliances
Despite the poor performance of major appliances, overall consumer appliances saw a good volume growth in 2010 over the previous year, with this largely in line with the review period CAGR and considerably higher than 2009 growth. This was due to the use of price competition and price promotions for many product areas across small appliances. Retailers and importers focused on offering economy products and price promotions in the year, with this trend driving strong growth rates in product areas as diverse as mini ovens and hair care appliances. Bargains notably attracted many new consumers, with the household penetration rate of many products rising as a result in 2010.
Consumers shop around in search of best value
Durable goods retailers continued to be the leading distribution channel in consumer appliances at the end of the review period, benefiting from offering a wide range, expert advice and strong after-sales service. However, this channel lost share due to growing price competition as a result of the economic downturn. Consumers became increasingly willing to shop around for the best value. In addition, many hypermarkets began to offer high-profile promotional deals on consumer appliances, with this channel thus gaining share in 2010.
Multinationals lead with little domestic production
Multinationals lead sales of consumer appliances, with Groupe SEB, Hitachi, Helen of Troy and Panasonic being the top four players in 2010. There is little domestic production of consumer appliances, with even domestic players such as Al-Futtaim and Mostafa Bin Abdullatif focusing on imports or basing their production in lower-cost countries such as India and China. In addition, most consumers prefer the reassurance of a strong global brand. Consumer appliances is however heavily fragmented, with “others” dominating volume sales in 2010. “Others” further gained share in 2010 over the previous year, with this due to many consumers opting for economy imports due to a growing focus on price.
Economic recovery set to fuel strong growth
Consumer appliances is expected to see a swift recovery in terms of volume growth during the forecast period as the United Arab Emirates’ economy recovers. Growth is expected to be particularly strong from 2012 onwards, with stronger economic growth in this year likely to fuel growing consumer confidence. Rising income levels will notably result in low-income consumers buying a wider range of products, with household penetration rates thus set to grow for most product areas during the forecast period.
KEY TRENDS AND DEVELOPMENTS
Construction downturn hampers sales
The United Arab Emirates saw an investment boom in construction for much of the review period, including high-profile buildings such as the world's tallest building and biggest shopping mall, along with a wide range of housing. During the country’s economic boom earlier in the review period, many expatriates came to the United Arab Emirates seeking to make money on property. However, this led to a real estate bubble, which propelled the expansion of Dubai via credit and speculative investment.
This bubble burst towards the end of the review period, with many suffering considerable financial hardship as a result. A large number of projects were put on hold or cancelled due to climbing raw material and labour costs and a lack of available investment. Banks stopped lending and the stock market saw dramatic drops. Hotel occupation dropped well below capacity and shopkeepers in newly-built malls reported a massive drop in sales towards the end of the review period.
The downturn in construction also impacted many expatriate workers. Perhaps the hardest hit workers were construction workers from the Asian subcontinent, with these workers on low wages as little as £70 a month. Asian embassies reported mass departures with many workers going home as companies were forced to close or absconding due to unpaid debts.
The exact number of unemployed in United Arab Emirates at the end of the review period is not known. The government does not release unemployment figures and prevents the press from running stories that could damage the economy, such as mass redundancies. All expatriates have to have a residency or work visa in order to remain in the country and therefore any expatriate that is made redundant is repatriated or asked to leave.
Current Impact
Within consumer appliances, major appliances greatly benefited from the construction boom earlier in the review period. These products saw annual volume growth of 11-14% annually over 2005-2008. However, as construction declined at the end of the review period so did growth for these products, with major appliances seeing just 1% volume growth in 2010. Built-in major appliances suffered most from the construction downturn, due to a decline in luxury housing, with volume sales declining by 1% in 2010 over the previous year.
The decline in luxury housing construction and a growing focus on cost reduction also impacted unit prices. Built-in major appliances saw 7% current value decline in unit price in 2009 over the previous year, as producers sought to maintain volume sales, and a further 1% decline in 2010.
Outlook
The United Arab Emirates is expected to see good economic recovery during the forecast period, with a strong resurgence in construction. In addition, despite the downturn the building projects still in construction at the end of the review period amounted to almost the equivalent of the US stimulus package.
Abu Dhabi boasts over 95% of the country’s oil reserves and accounts more than half of its GDP, with regional experts predicting that it will overtake Dubai as the destination of choice for westerners in the Middle East during the forecast period. Dubai meanwhile plans 42% increase in public spending on infrastructure projects at the start of the forecast period, in order to compensate for vanishing private investment. Abu Dhabi is meanwhile expected to increasingly support its poorer neighbour.
Future Impact
There is likely to be resurgence in construction during the forecast period, with this driving growth for major appliances. Built-in major appliances is thus predicted to see stronger growth during the forecast period in comparison to that seen during the review period, with volume CAGR of 10% and 8% respectively. During the review period, built-in major appliances saw weaker growth than freestanding variants. However, thanks to stronger construction activity during the forecast period, built-in major appliances is expected to see the strongest growth, with freestanding major appliances seeing just 7% volume CAGR.
However, while there is likely to be an ongoing focus on luxury housing during the forecast period this will not be reflected in unit prices. Companies and consumers will continue to be focused on cutting costs during the forecast period, with the constant value unit price of built-in major appliances thus expected to decline by 21% during the forecast period as a whole. This represents a considerably sharper decline in price in comparison to freestanding major appliances, which is expected to see just 6% constant value unit price decline during the forecast period.
Growing focus on environmentally-friendly products
The United Arab Emirates is well aware of the environmental benefits of its terrain, with the country’s economy built on fossil fuels and large oil revenues. Consequently, consumers became increasingly ecologically-conscious during the review period, with this reflected in a number of initiatives in the country.
Established in 2006, the Abu Dhabi Future Energy Company (Masdar) is focused on the development, commercialisation and deployment of renewable energy solutions and clean technologies. Masdar builds on Abu Dhabi’s position as a leading global energy player, aiming to develop renewable energy and low-carbon technologies at a global level, while also contributing toward the UAE’s economic diversification.
Current Impact
A number of manufacturers introduced eco-friendly products towards the end of the review period, which highlights companies’ commitment to contributing towards a greener environment. Players also sought to address a growing consumer demand for sustainable options in consumer appliances, with these enabling consumers to contribute to the environment through small everyday steps. Manufacturers sought to offer products with a minimal impact on the environment without compromising on performance or design. These appliances work at the same capacity as regular products but use less energy or incorporating features that enable consumers to actively save energy. Manufacturers also focused on improving waste management and recycling from the manufacturing process.
Philips notably launched its EcoVision plan in the second quarter of 2010, launching a range of energy-efficient products and announcing plans to generate 30% of its revenue from environmentally friendly products by 2012. In vacuum cleaners, the company notably launched three vacuum cleaners and a powerful handheld vacuum cleaner that use up to 35% less energy while offering the same results as higher-powered vacuum cleaners. These products are made from 95% PVC-free materials and also packaged with at least 95% recycled materials, which can in turn be completely recycled.
Eros meanwhile announced a partnership with Take my Junk UAE, a charitable foundation that provides donated goods to underprivileged people. Eros Digital Home outlets across the United Arab Emirates thus began to act as drop points for donations of consumer appliances, with this initiative promoted by Eros’ Pass it On! campaign. This initiative thus combines a focus on the environment and recycling, with a focus on social charity, thus boosting the company’s profile and environmental and charitable image.
Outlook
There is expected to be a growing focus on environmental issues during the forecast period. This will partly be due to global trends, with consumers generally becoming more aware of their impact on the environment and seeking to reduce this. This trend will be encouraged by strong media coverage of environmental issues and, increasingly, by government initiatives.
The United Arab Emirates for example will focus on solar power during the forecast period. Abu Dhabi meanwhile plans to become the “world’s first carbon neutral zero-waste city” and to obtain at least 7% of its energy from renewable sources by 2020, which will create demand for renewable energy in the city worth approximately US$8 billion over the next decade.
In response to consumers’ growing focus on the environment, manufacturers in all areas will push to offer more environmentally-friendly products. In packaged food, for example, this trend is expected to result in the launch of a wider range of Fairtrade-accredited and/or organic products, along with the widening use of recycled packaging. Players will not only focus on offering environmentally-friendly products, however, with manufacturers also increasingly focusing on environmentally-friendly business practices. With consumers becoming more aware of the need for environmental protection, producers are expected to face growing scrutiny of issues such as energy usage and waste management.
Future Impact
The choice and usage of consumer appliances is expected to be a major focus area for those concerned with the environment during the forecast period. Consumers will be urged to seek out the most energy-efficient models and to use these as sparingly as possible.
Manufacturers in consumer appliances are meanwhile likely to focus new product development in this area. In the United Arab Emirates, this niche is expected to be mainly developed by multinational brands, with Panasonic and Philips set to be leading players. Players will focus on energy efficiency, enabling users to minimise power wastage when products are not in use, for example. In addition, there is expected to be a growing focus on the use of recycled and recyclable materials.
In addition to focusing on offering more environmentally-friendly products, players are also expected to face growing scrutiny regarding the environmental impact of their business practices. This will result in players increasingly auditing their own business practices to minimise their environmental impact, with the results often being promoted as players strive for an environmentally-friendly positioning.
Consumer spending begins to recover in 2010
All GCC countries suffered as a result of the recession and the United Arab Emirates was particularly hard hit due to the collapse of the country’s real estate bubble. This collapse had a severe impact within the country due to a large number of construction projects being put on hold.
The country’s economy however appeared to be steadying in 2010, thanks to strong government investment and the assistance of large corporations. Consumer spending thus began to increase once more at the start of 2010 as the country’s economy began to recover. Industry sources claim that most residents of the United Arab Emirates believe that they have already seen the worst and believe that their jobs are now secure and that economic recovery is real and sustainable. This rising economic confidence resulted in strong growth forecast for retail sales in the country in 2010, with this expected to continue throughout the forecast period.
While expatriates account for a large share of the population in the United Arab Emirates, the majority of consumers for consumer appliances are United Arab Emirates natives or are Arabs from the GCC region. This is due to the fact that the majority of Western and/or high-income expatriates live in gated communities and are provided with consumer appliances in their accommodation, along with central air conditioning. Those expatriates not living in gated communities meanwhile tend to be low-income construction workers, with little free money to spend on consumer appliances
Current Impact
As a result of the economic downturn towards the end of the review period, consumers became less willing to spend large sums of money on new homes or to upgrade higher-priced items. Therefore the majority of consumers opted to remain in their current residence. This had a marked negative impact on sales of consumer appliances in 2009, with volume growth of just 3% in comparison to a review period CAGR of 8%.
2010 however saw a good level of recovery in overall unit volume terms, with a growth rate of 8% in line with the review period CAGR. However, the year saw a marked shift to lower-priced consumer appliances. While consumers began to spend more freely once more in 2010 many remained reluctant to opt for costly major appliances or struggled to obtain the necessary credit to do so. Consequently, major appliances saw just 1% volume growth in 2010, while consumers cheered themselves up by buying small appliances. Small appliances thus saw an impressive 9% volume growth in 2010 over the previous year, with this exceeding the growth rate seen in this area for much of the review period.
Volume growth for small appliances was however driven by the use of price promotions, with players reducing prices in many areas in order to drive volume sales. Irons, small cooking appliances and small kitchen appliances (non-cooking) all saw 6-7% current value unit price decline in 2010 over the previous year. This was due to the combined impact of bargain hunting among price-sensitive consumers and the increasing use of price promotions by producers, importers and retailers. Consumers increasingly visited three or four retailers before opting for the best value product or shopped around for the lowest price online. Price promotions were meanwhile used to attract consumers during peak sales periods, with Ramadan for example seeing a surge in the use of price promotions.
Outlook
Over the first half of the forecast period, the United Arab Emirates’ economy is expected to improve, with consumer incomes and sense of economic security thus also seeing good growth. Consequently, consumer spending is expected to gradually return to levels seen prior to the recession. However, there is expected to be a continued focus on price during the forecast period, as retailers and producers compete heavily to attract consumers’ attention. In addition, many consumers began to enjoy bargain-hunting towards the end of the review period and are expected to continue to actively seek out the best value when shopping during the forecast period. The value of retail sales in the United Arab Emirates is thus expected to grow by 4% in constant value terms in 2010 and by 8% in 2011.
Future Impact
The forecast period is expected to see strong volume growth for consumer appliances as a result of the United Arab Emirates’ economic recovery. Overall, consumer appliances is expected to see 12% volume growth during the forecast period in comparison to just 8% growth during the review period. Volume growth is expected to swiftly rise to 12% annually by the middle of the forecast period and is expected to increase further to 15% annual growth by the end of the forecast period.
However, consumers will continue to think carefully before major outlays during the forecast period. The economic downturn towards the end of the review period startled consumers, with many consumers thus seeking to increase their savings levels in order to ensure stronger personal financial security. As a result, small appliances is expected to see stronger volume growth than major appliances during the forecast period, at 12% and 9% respectively. Consumers will be more willing to purchase small appliances due to these products’ lower cost.
In addition, volume growth in small appliances will be driven by strong ongoing price competition, with constant value unit price expected to decline by 7% during the forecast period. Players in major appliances will be less willing to reduce prices meanwhile, with unit price decline towards the end of the review period having eroded profit margins. Instead, major appliances is expected to see 3% growth in constant value unit price during the forecast period, with this largely due to players focusing on offering energy-efficient products at a higher price.
Growing interest in internet retailing hampered by poor payment infrastructure
Consumer interest in internet retailing continued to grow in the United Arab Emirates during the review period. However, most internet retailers available in the country are from the US and UK. Banking systems within the United Arab Emirates meanwhile prohibit high-ticket purchases via the internet and therefore many websites offer a payment on delivery option. This inevitably deters many consumers and reduces the convenience offered by the internet retailing channel.
E-commerce thus remains in its infancy in the United Arab Emirates and companies were slow to invest in this area. This was due to the high cost involved in setting up internet retailing facilities within the United Arab Emirates, due to the high cost of government licences and secure payment systems. In addition, the high percentage of low-income workers in the country deterred companies from investing in internet retailing. These consumers generally lack access to internet facilities and credit cards, which are essential to online shopping.
Current Impact
Despite growing interest in internet retailing, few players in consumer appliances offer e-commerce facilities, with these generally being rudimentary. Most consumer appliances retailers offer details of products and special offers on their websites but customers are directed to bricks-and-mortar stores within the country if they wish to make purchases.
As a result of these constraints, internet retailing continued to be a minor channel for consumer appliances at the end of the review period, accounting for just 3% of overall sales. The channel saw good growth of 9% in volume in 2010 over the previous year, however, as the economic downturn encouraged consumers to seek out bargains online.
With poor payment and delivery systems and a limited number of players engaging in internet retailing, the share of this channel remained lowest in major appliances at less than 2% in 2010. In contrast, small appliances saw 3% of volume sales derived from internet retailing, with a particularly high share of 5% in air treatment products and 4% in personal care appliances. Personal care appliances also saw the strongest volume growth for internet retailing in 2010 over the previous year, with this due to consumers buying economy products from Asian countries. Consequently, internet retailing saw an impressive 11% growth in volume in personal care appliances in 2010 over the previous year.
Outlook
Internet retailing is expected to grow quickly in the United Arab Emirates during the forecast period, with a widening range of retailers and producers likely to offer internet retailing sites. Younger consumers grew up with emerging technologies, with new house owners and young professionals thus likely to turn to internet retailing as a result of its convenience and quickness.
However, internet retailing will continue to face stiff competition from traditional shopping outlets and channels. Shopping in the United Arab Emirates is not always undertaken out of necessity. Due to the country’s hot weather, many consumers spend leisure time in shopping malls. Internet retailing thus needs to provide a wide range of goods at competitive rates in order to encourage more users.
The main issue with internet retailing for most consumers is a fear of fraud. The United Arab Emirates is slowly catching up with other developed countries in this area, however, with secure transaction protocols being enforced by many website owners. The country’s authorities are also helping to combat fraud and boost confidence levels in potential consumers by promoting safe internet retailing guidelines.
Future Impact
As payment methods evolve and price comparison websites become available in the United Arab Emirates during the forecast period, internet retailing is expected to gain share in consumer appliances. The channel will increasingly be used for purchases of small appliances and, once payment infrastructure is fully in place, will also be widely used for purchases of major appliances.
Once a solid payment infrastructure is in place, internet retailing is indeed expected to see the strongest growth in volume sales in major appliances. This will partly be due to sales rising from a lower base. However, strong growth will also be underpinned by consumers’ strong focus on bargains, with consumers seeking to save money on these higher-priced items. In addition, consumers will appreciate the convenience of ordering these large and expensive items online via financial cards and also welcome the convenience of home delivery.
New product development focuses on multifunctional products
The United Arab Emirates is home to a large number of wealthy households, with many consumers willing to pay more for cutting edge design or additional functionality. Consequently, while price competition remained strong in consumer appliances throughout the review period players also competed to offer more advanced products. This strategy was also adopted by the leading players as they sought to better differentiate their products from lower-priced competitors such as economy Chinese or South Korean imports.
Current Impact
There was a growing focus on multifunctional products in new product development towards the end of the review period. De'Longhi for example launched the Kenwood Chef in July 2010, with this high-end product benefiting from 100,000 man hours of development and 60,000 hours of product testing. The Kenwood Chef combines a food processor with a safe, rapid-heating and energy-efficient induction heater under the mixing bowl. The product is positioned as aiding in the rapid creation of complicated dishes and its launch was timed to encourage strong sales prior to and during Ramadan.
Samsung also aimed for a premium positioning with its launch of the Aurora CQV513 Microwave Steam Oven in 2010. This cooks four times faster than conventional ovens, thus saving time. It also claims to save space, as it can be used in lieu of ovens and steamers and can produce a crisp and golden crust. The appliance also benefits from a health and wellness positioning, with superheated steam reducing the amount of fat in food by 20% and reduces the salt in food by 11% while preserving flavour, texture and appearance.
Candy’s launch of TRIO however adopted a differing approach to multifunctional appliances. This launch combines a hob, oven and dishwasher into one appliance and aims to offer value and space-saving, with the launch targeting small low- and mid-income households. The appliance has a standard 60cm x 60cm dimension and also offers an A energy-efficiency rating.
Outlook
The United Arab Emirates has a large average household size, at six people at the end of the review period. However, there was a shift towards smaller household sizes during the review period, with many young married couples opting to leave their extended families and move in together. In addition, there was a growing trend towards larger households opting for additional cooking facilities in order to offer their inhabitants greater convenience. Consequently, there is expected to be ongoing demand for compact multifunctional products in consumer appliances during the forecast period.
Future Impact
Players are expected to continue to launch multifunctional products in consumer appliances during the forecast period. Players will thus seek to clearly differentiate their products from lower-priced competitors such as economy imports and private label. Growing demand for space-saving appliances due to a shift towards smaller households will also encourage this trend.

The pioneers in multifunctional consumer appliances are expected to be positioned as premium, with the strong added value offered by these products being reflected in their pricing. However, these launches are expected to be followed by similar launches at lower prices, thus making multifunctional appliances attractive to a wider range of consumers. Dishwasher-hob-oven combinations could well prove particularly popular, offering busy dual-income households the opportunity of installing a dishwasher into smaller kitchens. Heated food processors could also well prove increasingly popular during the forecast period, particularly around the time of Ramadan when many are kept extremely busy preparing lavish feasts for family and friends. 

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