designer-luxury
designer-luxury

Luxury's Latest Frontier: Brands Rush to Expand In Surging Middle East

Building fashion fortunes on sand? You bet.

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with contributions from Alessandra Ilari
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Brands targeting young consumers, including fast-fashion giants, are among the most recent arrivals and, given the demographics — Al-Sabah estimates some 70 percent of the population in the Gulf region is under age 30 — have strong growth potential.

The first See by Chloé boutiques are slated to open next spring in Kuwait and Jeddah, and Toledano said its second line should account for 50 percent of the business in about two years. Four Chloé boutiques are also slated to open in the region next year.

John Hooks, ceo of Giorgio Armani, said that "huge demographic" growth is another factor underscoring the brand's expansion in the region, which will culminate with the opening of an Armani hotel next year in the world's tallest building, the Burj Dubai. The hotel is a partnership with local real estate developer Emaar Properties.

"A younger population is a great opportunity for A|X Armani Exchange, and last spring we opened an A|X unit in Beirut [Lebanon] in the wake of openings in Dubai, Abu Dhabi [United Arab Emirates], Jeddah and Riyadh," Hooks said. "The area has a huge potential for all our lines...and for all our licensed categories."

Al-Sabah said 80 percent of his business is based on local clients, and in the Gulf region in particular, word of mouth among the right social circles is crucial. What's more, customer loyalty is built by paying extremely close personal attention, from attending weddings and funerals to visiting sick clients in hospitals, he added.

But, while the region is riding high now, there are some challenges. Chief among them, executives agreed, is finding suitable locations for their stores.

Most retail locations are mall-based, and some house everything from supermarkets to jewelers. As for the possibility of any slowdown, executives said key risks to the region would be a big drop in oil prices or political instability. However, they played down both, with Caillaud noting: "The Middle East community is very united due to religious faith and economic interests, and usually have stable governments."

Armani's Hooks agreed, citing a "new generation" that received a more Western education and is competitive and modern. "All in all, I think the Middle East is committed to modernization, to opening up to foreigners and to growing," he said. "There's no going back."
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