x Abu Dhabi, UAEWednesday 26 July 2017

More than meets the eye in a discount sale

The total number of consumer electronics items sold in the Emirates increased slightly over the past year - but consumer spending fell by more than a third.

A fire sale has a rather ominous sound to it. The phrase probably originates from retailers being forced to offer heavy discounts for fire-damaged goods. It may not be the best description for the electronics sector in the UAE: there has been a dramatic reduction in prices but the sector remains hot. Consumers are still buying the same bright and shiny gizmos, but as The National reports today, high-end products have taken a hit. In fact, the total number of consumer electronics items sold in the Emirates increased slightly over the past year - but consumer spending fell by more than a third. The explanation? Retailers were forced to offer serious discounts to lure customers to their stores.
We don't have to re-read our Keynes to know that an economic crisis can cause consumers to cut back just as an economic recovery requires them to spend. But the steep discounts raise another question: if retailers can cut prices so drastically, why were they so high in the first place? It is a well-known fact that consumer items in the UAE are generally more expensive than elsewhere. But if it makes sense to cut prices by more than a third, perhaps prices were too high from the start.