MILAN — “You can’t do business with stereotypes in mind,” said Armando Branchini, general secretary of Italy’s luxury goods association Fondazione Altagamma, which organized a round table here to help define the Middle East market.
“The region has unique characteristics and enormous potential in diversified investments,” said Santo Versace, president of the foundation and chairman of the family-owned company, noting that the second Palazzo Versace resort will open in Dubai next year. “Despite the slowdown in 2009, this market is set to grow with a leap going forward,” he said.
The gross domestic product of the Gulf Cooperation Council grew 7 percent in 2008; 0.6 percent in 2009; 5.2 percent in 2010, and is expected to rise 7.8 percent in 2011.
According to Altagamma and Bain and Co., the luxury market in the Gulf area totaled $5.7 billion in 2010 and they estimate a 10 to 12 percent growth by 2013.
Reviewing the customers’ attitude in the region, Patrick Chaloub, co-chief executive officer of luxury brand distributor Chaloub Group, said “they consider shopping as their main leisure activity and like to shop with friends (70 percent) or sisters and mothers (40 percent). Friends and family are the most influential in the decision-making process.”
Chaloub also said Middle Eastern consumers want brands that are “visible and recognized,” but also limited edition products in order “to express their individuality.”
Paolo Anselmi, vice president of consumer research institute GFK Eurisko, said the area, relying on oil, trade, tourism, finance and retail, has not only a “superrich” customer base, but is also developing a middle class, “more open to information, pacific and tolerant, while always in the respect of tradition and never detached from religion, although there is no religious fanaticism.” In particular, women have evolved, he said, citing that 75 percent of university students in the region are women.
Massimo Piombini, Valentino’s worldwide commercial director, said the brand has been available in the region for more than 12 years, and concurred with Anselmi. “One of our best couture customers in the world in a princess from the Arab Emirates, but, at the same time, [diffusion line] Red is growing very well, just as the middle class is, too,” said Piombini. “There is a range of possibilities that didn’t exit before, there’s been a quality change and their malls don’t come short of those in the U.S.,” he added. Piombini said the company is building its presence in the region, hinting at a possible new partnership agreement next year, most likely with Chaloub Group.
Laudomia Pucci, image director at Emilio Pucci, said the company also is strengthening its presence in the Middle East, a market she described as “young and challenging, with many opportunities,” and underscored the relevance of “personalized service” and “educating store assistants. They are very particular about service there.” Pucci counts eight boutiques in the region, out of the total 50 locations globally.
Chaloub also insisted on “developing knowledge of market dynamics” to expand in the area. “This is a young, eager population (50 percent of it is aged between 15 and 29), with a high dispensable income and strong purchasing power,” he said.
A Chaloub Group survey with Datamonitor showed that in Saudi Arabia, the United Arab Emirates, Kuwait and Qatar, perfume and cosmetics spending on average totals $400 per quarter; clothing $650 a month; accessories, $450 a month, and gifts, $1,000 a quarter.
“Shopping is integral to social life, it’s more about pleasure rather than necessity, and the environment is very favorable to shopping. Consumers were very attracted to brands to find reassurance, but they are now looking at products more. It is a must to adapt to the Middle East while remaining true to the brand’s values,” continued Chaloub.
Vittorio Missoni, chairman of the family-owned company, said the namesake brand has the advantage of “a strong identity of product,” with its recognizable colorful patterns. “Customers are very refined and savvy now and the market is rapidly expanding,” he said.
Missoni’s second hotel, furnished with the brand’s home designs, was officially unveiled on May 25 in Kuwait City and a resort is in the works in Oman. “Interior design also helps promote our brand in the area,” said Missoni.
Stefano Sincini, Tod’s chief executive officer, said the brand cannot rely on runway shows for added visibility. One tool to further expand the accessories label was to leverage on Italian craftsmanship. “It was a winning choice,” he said.
“It’s not an easy market, because there are many different approaches to it, but a priority is to never lose the DNA of the brand,” he said.