While Dubai’s leaders seek to plug the gaps in the country’s finances, fashion and luxury consumers in the cash-strapped emirate don’t appear to be worried. And they’re still shopping.
Brands including Versace, Armani and Burberry are conducting business as usual as shoppers flood the local malls, which double as parks, entertainment spaces and refuge from the searing desert heat.
Earlier this month, Versace marked the opening of three stand-alone stores at the Dubai Mall with a big cocktail party. The Versace flagship there is now the largest in the Middle East, while the other stores are jewelry and home units.
“There is a wonderful mood; the restaurants are filled, and people are shopping,” said Francesca Versace, who accompanied her father, Santo Versace, to Dubai for the openings. A designer who lives between London and Milan, Versace admitted there may not be the same buzz in Dubai as two or three years ago, but “it’s certainly not as bad as people think.”
Versace said she and her father also checked out progress on the upcoming Palazzo Versace, the residential and resort apartment tower being built by Emirates Sunland Group with Versace interiors. More than 1,000 people are working every day on the building site, she said, and the project is due to be completed next year.
“The Versace openings were packed,” said Charlotte Murphy, a freelance fashion stylist and editor based in Dubai. “More generally, stocks in the luxury stores are low; I am even having trouble finding items to borrow for my shoots.”
John Hooks, deputy general manager of Giorgio Armani, said the company is going ahead with expansion plans in Dubai, at the Mall of the Emirates.
“Giorgio Armani was perhaps the first major international brand to open in Dubai in 1994 with a major flagship. We now have over 10 stores in the Emirates and others in Abu Dhabi,” he said.
“Earlier this year, we opened a flagship at the Dubai Mall and we will open an additional Giorgio Armani store at the Mall of the Emirates next year. Business continues to be satisfactory, primarily due to the unrivaled role of Dubai as a tax-free hub and crossroads for the whole region,” he added.
Tourism is thriving, with many flights to Dubai discounted — and fully booked. Russians at one time accounted for a large percentage of luxury sales in Dubai, but the economic troubles there caused Russians to cut back on their trips. “The Russians come and go in waves, and the Chinese are flooding in,” said one high-ranking retail executive based in the region. “Everyone is going back to basics, buying chic classics, so you see stores like Vuitton and Chanel doing very well.”
The executive added: “Meanwhile, the Western brands are seeking to change the nature of their deals here from the traditional franchise model to joint ventures, so they can take better advantage of the profit margins.”
One company that has succeeded in doing just that is Burberry. In late 2008, the British brand formed a joint venture with its long-standing franchisee The Jashanmal Group to create a Dubai-based company in which Burberry has a 59 percent stake.
While Burberry declined to comment on current trading in Dubai, a spokesman said: “We are pleased with the development of our joint venture in the Middle East, particularly in our key growth strategies, including children’s wear. We now have five stand-alone stores in Dubai.”
And while these aren’t exactly go-go days for retail in the region — store sales are reported to be down 30 to 50 percent — the picture is not as gloomy as many media outlets would paint. For most Dubai locals, the country’s financial problems are not new. Some layoffs took place as early as six months ago, and the local media is controlled to the extent that bad news is kept to a minimum.
“From what I’ve seen, the Dubai Mall is jam-packed; it’s the largest and nicest one. People also come for the huge aquarium, ice rink and SEGA entertainment center as much as for the shopping,” said one Dubai-based financial analyst. “The Mall of the Emirates is also jam-packed; kids and teenagers seem to love this place, while the Marina Mall — which is newer — has lower footfall.”
The analyst added: “You can’t really say how much mall goers are actually spending, but that was the case even during the boom.”