“The tsunami of e-commerce is going to hit the shores of the Mideast. Straight away, it will be mobile, not desktop.”
That’s Marcus Freeman, chief financial officer of the Chalhoub Group, talking up the region as huge opportunity for retailers and brands. The Dubai-based Chalhoub Group brings luxury brands to the Mideast through its retail, distribution and marketing services and has more than 12,000 associates working in 14 countries and a network of 650-plus retail stores. Freeman spoke Tuesday at the Retail Leaders Circle conference themed, “Re-Configuring, the New State of Retail”and held at the Mandarin Oriental hotel in Manhattan.
Freeman said the Middle East was a complex business environment and didn’t neglect to cite the turmoil in some countries such as Yemen and Syria, but with its young population and propensity for luxury — particularly accessories, jewelry and beauty products — and economic growth rate that’s been higher than the U.S. or Europe, the market is ripe for online activity. The channel is not as prevalent in the Mideast as in the West. But according to Freeman, “a digital revolution is in the making.”
Primarily, Freeman addressed market conditions within Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which comprise the Gulf Cooperation Council. “Smartphone penetration is very high and social media is becoming increasingly powerful…lots of pure plays are coming into the market,” he said.
Freeman said 50 percent of the population is under 30, the average annual luxury spend per person is $2,000, but the average spend on gifts is $10,000 annually. YouTube, WhatsApp and Facebook are among the most popular social media platforms.
Middle Easterners are “very much into accessories due to traditional dressing standards,” Freeman said, meaning they cover up more to show less of their bodies but are into adorning what they wear. He also said leather goods represents a higher proportion of the fashion spend, compared to the West.
According to Chaloub’s figures, the Persian Gulf region has a 2.9 percent GDP growth rate through 2018, whereas Europe is at 1.7 percent, and the U.S. is at 2.4 percent.