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Eyeing Luxury Market Growth
Patrick Chalhoub, co-CEO of The Chalhoub Group, talks about the region’s luxury goods market and vision for the future.
May 23, 2012 3:22 by kippreport
I would say no market in the region is over saturated in terms of leasable space, probably Dubai was at the limit in 2009 and 2010, but it is very dynamic today. One more thing we must see is that besides the tourist inflow in Dubai, we also have a very rapidly growing local population and our domestic consumption is increasing rapidly. So, apart from some peaks, when a megamall enters the market, the growth in the retail space is not faster than the population growth and the consumption growth. Of course, all the markets are not at the same level of maturity. So we have certain markets where the consumer is much more mature than the others.
We are also seeing a trend where brands are now setting up their own stores rather than going through a retailer or multi-brand distribution?
I would say you have a certain cycle. In the first cycle you present the brand in a very diverse environment, with lots of other brands, then you move it to, say, a specialist outlet like a fashion shop. And then when you think the market is ready and the brand is ready, you go for a free-standing store to express it much more in-depth. These stores have bigger collections and, of course, the [bigger] ambience and experience that reflects the brand. But how many free-standing stores can you set up in each market; you would like to be present in all key locations of any major market. So, by force, you come back to the multi-brand.
The group has evolved into a very large, multinational empire today. How have you ensured the business grows and at the same time processes are institution¬alized, while staying focused on luxury, your core competency?
I would go back to what you were saying. We have had, I would say, the willingness to stay extremely focused. We wanted to remain extremely focused. And as much as the market has evolved, the luxury market and the Middle Eastern market which are our core business areas. We would really say every year it grows and grows faster and we have benefited from the growth as much as we can by remaining extremely focused about it. So we really benefited from the fact that we remained extremely focused and we didn’t disperse ourselves in real estate or other businesses, despite all the temptations that we had and also since many of our peers went the same route. But we stayed focused. The second very important element, and again you covered it more than me, is that as we are a family business, we are not necessarily interested in accumulating wealth for today, spending it in I don’t know which way, or investing it in something else. We really continue to reinvest our time, effort and our money in our business in order to grow our business. So the conclusion of think¬ing long term and strategizing, being very focused at the same time, has helped us to grow to what we are today.