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Affluent conversation, Part II
Luxury is a “national obsession” in the UAE, say advertising industry analysts. And rather than taking the shine off all that glitters, the credit crunch could put the exclusion back in exclusive. Part II
December 22, 2008 8:15 by Kareem Shaheen
UAE may be one of the biggest luxury markets in the world, but it is certainly not immune to the current economic slowdown. Particularly vulnerable is Dubai, a city fueled towards boomtown status thanks in part to a debt-riddled real estate explosion. A Financial Times analysis explains that “as oil prices, the main driver of the Gulf boom, slid sharply towards $70 a barrel, Dubai’s high levels of debt reinforced concerns over the bubble forming in its property market.” Other Gulf states with declining oil revenues were not immune to the credit crunch, with governments scrambling to inject liquidity into their banks.
But don’t count the region, its hunger for luxury and its marketing opportunities out just yet.
Merrill Lynch and Capgemini’s World Wealth Report 2008, a document that analyzes trends in the number and behavior of high net worth individuals, points out that the market for luxury products and services in emerging nations is remarkably resilient. “Even as financial market turmoil made an impact on the United States during the second half of 2007, luxury goods makers, high-end services providers and auction houses all found ready clients in the emerging markets of the world.”
Dubai itself is testament to this. The Dubai Mall, which (finally) opened in November, boasts large concept stores for luxury fashion brands. These include Galeries Lafayette from France and the first Bloomingdale’s to be located outside the US – which is scheduled for a 2010 launch. It has taken a cue from the Mall of the Emirates and one of its anchor stores, Harvey Nichols, creating an environment and presence as a substitute for direct marketing. However, Mac McClelland, chairman of the Dubai chapter of the Luxury Marketing Council points out that the influx of luxury brands into the region is fueled by a survival instinct – to expand their marketplace in response to the credit crunch. Luxury marketers are seeking outside markets to avoid being mired by belt-tightening among European and American consumers.