Jumbo Group: The future of retail is digital

Arvind Agrawal, CEO of Jumbo Group, on how businesses must deal with changing consumer behaviours as well as the power of technology in driving the recovery from the Covid-19 pandemic.

What are your thoughts on the consumer electronics industry in the UAE today?

The last few years have seen a steady decline for most businesses on account of the geopolitical situation, the real estate market, and other fluctuations. However, in 2020, we felt that consumer demand was picking up and businesses had again started making major capital investments in the country. Then the outbreak of Covid-19 resulted in a major unexpected disruption for most of the businesses. The months of April to June saw a dramatic drop in consumer demand overall. However, certain categories within our sector such as laptops, appliances, and smart products saw good offtake during this time. On the other hand, our Enterprise IT System Integration business saw a strong surge, and the business grew in excess of 160 per cent due to the implementation of work from home policies and other related changes in working norms.

Since July, we have seen a strong recovery, with sales being close to the same period recorded last year. As consumer confidence returns, and since people in the UAE have not been able to spend on holidays and travel, we have seen consumers spending on home and technology. Home entertainment, home comfort, laptops, and smart technology are the major categories that have done extremely well at this time.

The October to December quarter will see many new launches from major brands like Apple, PlayStation, Dyson, Xbox, and others. We see this driving sales in this period, however the expected drop in tourist traffic will adversely impact demand by 10 per cent to 15 per cent.

What will drive the market from the pandemic recovery?

Technological innovations and digital transformation across categories will drive the technology market from the pandemic recovery. This will occur due to lifestyle changes and the 'new normal' across the board - how we buy things, where do we prefer to work from, eating out versus ordering in food online. All of these choices will determine a change in the way consumers create market expectations, and all industries that are already on the pathway of innovation and digital transformation will benefit from these rapid market changes.

For example, we at Jumbo always have been at the top of our game, having adopted the digital transformation of our company two years ago, which has today helped us grow at a time when other businesses are finding the conditions extremely challenging. We are investing heavily to deploy digital solutions to increase our customers' experience with the brand across all our divisions and through its various touchpoints. We are also working towards optimising time to market (TTM) by integrating our supply chains downstream and upstream.

What are some of the key trends that you have recently observed with regards to consumer behaviour?

The attitudes, behaviours, and purchasing habits of consumers are changing after the onset of Covid-19 and it seems likely that it will continue to be accepted as the 'new normal'. While initially it seemed that purchase was centered on the most basic of needs, this soon evolved into increasing purchases in comfort categories such as home entertainment, as well as gaming categories. There has also been an increase in consumer interest for embracing digital commerce to manage isolation and social distancing, allowing consumers to use digital to connect, learn, and play.

What are your comments on e-commerce versus the traditional brick-and-mortar concept?

E-commerce is part of the future of retail, and the entire world has witnessed the spike of e-commerce sales particularly with the advent of the pandemic that led to a mass lockdown for extended periods of time. Jumbo also experienced an exponential rise in e-commerce sales of up to five times during the April to June quarter this year, compared to the same period in 2019. The overall e-commerce markets for consumer electronics across the UAE was also up by 2.5 times, as per GFK estimates. This is no longer just a 'trend' but here to stay, with customers preferring the convenience of shopping from home coupled with prompt delivery.

However, as seen by markets in Europe and the Americas, physical retail continues to be an extremely important channel for customers, especially when it comes to experiencing new products, seeing demos and getting advice. Thus, we don't see the future as e-commerce as 'versus' brick and mortar, but rather e-commerce 'with' brick and mortar - an OmniChannel future.

What is the future outlook for the sector?

The consumer electronics sector is set to only get stronger, with technology fundamentally re-shaping how consumers spend their time at and away from work. Between AI, IoT, wearables, 5G, and other new technological innovations changing the landscape, the industry will surge ahead and we are confidently investing significantly in our OmniChannel business.

• Business and Technology Review