WWD.com/business-news/direct-internet-catalogue/gulf-consumers-set-to-go-digital-7742779/
government-trade
government-trade

Online Shopping Primed to See Strong Growth in the Middle East

A report by Chalhoub Group predicts online shopping will become increasingly important in Gulf States.

PARIS — Online shopping is set to become increasingly important in Gulf states in the next few years as luxury consumers seek to enhance their in-store experience, according to a report by luxury retailer and distributor Chalhoub Group.

Affluent shoppers in the region — comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — spend on average $2,400 a month on beauty, fashion and gifts, it said.

Although 84 percent of those who use the Internet say they regularly access brand Web sites, only 26 percent actually shop online, the study found. “For 44 percent, it is the need to see and feel the product that makes them shy away from Internet purchase,” it added.

However, that is set to change as the region’s predominantly young population increasingly looks for unique experiences and products.

Anthony Chalhoub, who runs the group with his brother Patrick, noted information was traveling at a lightning pace.

“We see customers showing up with a printout from a fashion show that took place two hours earlier and saying, ‘I want that product now,’” he said at a presentation in Paris on Wednesday. “It makes us a little nervous because we don’t know the product — we don’t even know if the brand is going to commercialize it.”

Patrick Chalhoub predicted the quest for novelty, combined with a desire for an increasingly effortless shopping experience, would drive Internet use, both at home and in stores. “In parallel with what is happening in the rest of the world, there will be fewer barriers between the digital world and the external world,” he said.

The report forecast that stores would become an extension of the home with large spaces including private areas, comfortable seating and hospitality. “It will be digitally enhanced, enabling easy screening of the whole boutique, pre-booking, e-commerce and virtual trials simultaneously shared online,” it said.

This trend will be fueled by a strong desire for original and limited-edition products, a key differentiator for Gulf customers, with 76 percent saying they like to have the latest in everything they own.

“Gulf Luxury Consumers: A World Apart?” — Chalhoub Group’s second white paper on the consumption trends of luxury Gulf consumers — identified three archetypes:

• The gazelle is fashion-forward and looks for self-expression through luxury, with a strong presence on social media and an appetite for lesser-known designers and brands.

• The horse is status-oriented and sees luxury goods as a means to gain social acceptance and peer praise, gravitating toward the most well-known and expensive brands.

• The hawk is an emerging category of consumers who seek out experiences and specific objects more than brands. Hawks are particularly sensitive to personal relationships with family, friends or sales staff, the study said.

“Coupled with the quest for novelty, latest releases and the ‘having it before anyone else,’ digital appeal should grow among affluent nationals. Its only limitation is trust — trust in the product quality, trust in the payment, trust in the operator,” it concluded.

However, it was too early to predict when this would translate into a jump in online sales, said Patrick Chalhoub.

“In the Middle East, it is still in its infancy, because the whole transactional side is still not completely functional in terms of delivery, payment and trust,” he noted.

“If the offer becomes more adapted and integrated with the physical world, it will grow more rapidly and exponentially, but the infrastructure is not yet in place.”

Anthony Chalhoub noted that it was not infrequent to see return rates of 25 to 30 percent for luxury products bought online, or buyers paying in cash on delivery.

“Many brands have a very nice presence on the Web, but they don’t want to sell on the Web,” he said. “Mentalities are going to change, but on both sides.”