trends-analysis
trends-analysis

Middle East Retail Returns to Growth Track

Luxury brands Hermès, Oscar de la Renta and Van Cleef & Arpels see potential though overall spending hasn't fully recovered.

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In the latest rankings by global commercial real estate service provider CB Richard Ellis, the United Arab Emirates came in second after the U.K. in terms of presence of international retailers. A city breakdown showed Dubai closing in on London, which topped the list, with 55 percent of 294 international retailers surveyed present in Dubai compared with 56 percent in London.

Elisabeth Ponsolle des Portes, president of French luxury goods association Comité Colbert, which is focusing its international activities in 2010 on markets such as Kuwait, Saudi Arabia and the United Arab Emirates, said red tape and tax obstacles faced by brands trying to enter other emerging markets such as India and Brazil have helped turn the spotlight on the Middle East.

She noted French luxury brands are venturing beyond the region’s traditional point of entry, Dubai. Key cities attracting new retail ventures include Riyadh, Jeddah, Kuwait City and Abu Dhabi.

Michael Leighton, senior retail consultant, CB Richard Ellis Middle East, said retailers are using Dubai, which is considered saturated, as their base and then expanding in the region. “There is a huge interest in Saudi [Arabia] from franchise operators,” he said.

“Brands feel more confident about pushing further towards a local clientele,” said Ponsolle des Portes, adding that for jewelry, fashion and accessories in particular, there’s room for growth. While 90 percent of Comité Colbert’s 75 members (except for the hotel, wine and spirits sectors) are present in the Middle East, collectively representing 2,000 points of sale, more than half of the business is generated by perfume and cosmetics.

Tapping into Saudi Arabia’s teen market, meanwhile, Al Rubaiyat Co. has aggressive plans for its new concept store carrying California brands. Boosted by strong sales, the firm, which has stores in Jeddah and Khobar, plans to possibly grow the concept outside of Saudi Arabia. Its target pre-twenties age group is said to represent a majority of Saudi Arabia’s population.

 

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