SAWT BEIRUT INTERNATIONAL

| 28 January 2022, Friday |

Home appliances companies adopt new strategies to survive economic crisis

Rania Ghanem
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The household appliances and consumer electronics sector in Lebanon has not been able to isolate itself from the economic crisis, although companies are striving to maintain business continuity until the economic situation recovers.

Acceptable activity

In the last two months of 2021, demand for household appliances was good, according to Joy Yazbek, Marketing Director at Khoury Home, although he told Sawt Beirut International (SBI) that the activity during the festive season this year was less than the previous years, but it was better than the activity recorded during the whole year.

Naji Saadeh, Managing Director at Abed Tahan and Sons pointed out that the majority of customers benefited from the Black Friday offers, as they bought all the gifts they needed for the holidays early, and this has slowed down the shopping activity during the festive season.

Demand for luxury appliances has plummeted in the last period, and focused on necessary electrical appliances that are required for daily life, such as washing machines, refrigerators, and others, according to Yazbek. Saadeh said that kitchen electrical appliances are also still in high demand.

 

Major changes

In light of devaluation, severe drop in customer’s purchasing power, and hyperinflation, companies were obliged to shift into other sources, as they have replaced European-sourced products with devices that meet the customer’s purchasing power.

Khoury Home is offering Turkish-made appliances and others products assembled in Arab countries. The method that the company seeks to achieve is the best price for the best quality. Demand for made-in-China products have also increased, especially for mobile phones, according to Saadeh. The customer who used to change his phone from Samsung or iPhone to get the latest model every year, is now keeping his device as long as it works efficiently, and some were forced to buy a Chinese device because it is cheaper.

In addition to the unprecedented drop in the value of employees’ salaries by 95 percent, the absence of the loans and installment scheme has led to the exit of a wide variety of customers from the market, as banks are no longer able to provide loans, while household appliance companies cannot support any payment facilities on their own.

 

High Operational Costs

The sector is facing several challenges, the most prominent of which the high operating costs, as operating generators to open showrooms has become in cash dollars, according to Yazbek. The majority of companies also tended to dollarize employee wages in light of the high cost of living, especially gasoline, according to Saadeh.

 

New reality

The financial crisis has imposed a new reality, as setting the products’ prices that are imported in dollars has become a difficult task with the deteriorating exchange rate of the lira against the dollar on a daily basis, according to Saadeh. He added that the prices of some devices that have risen slightly due to the drop in global production, driven by the closures imposed by Coronavirus pandemic in the past two years. It is likely that the prices of goods in the local market will increase in the coming period if customs duties are amended to become in dollars.

 

Unfair competition

The chaos prevailing in the market opened the door to a parallel market that offers smuggled devices at prices that compete with the goods offered in the official market. Saadeh said: “This may be in the interest of the consumer who succeeds in obtaining goods at competitive prices, but he will find himself unable to provide after-sales service in the absence of any guarantee for smuggled goods.”