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Villa Moda vs Harvey Nichols
The Middle East is nuts for luxury, and two retailers lead the department store sector – one home grown, one international.
Prada, Yves Saint Laurent, Roberto Cavalli, Armani…you name it, Gulf countries have them all. In a region where, thanks to steady demographic growth – half of the population is under 25 – and sustained spending capacity, not to forget the 15 million tourists that are expected to hit Dubai annually by 2010, the luxury goods market shows little sign of slowing down.
With an estimated $167bn regional market, growing by an average 10 percent annually (and by 20 to 30 percent yearly in Dubai alone), home-bred luxury retailers such as Villa Moda, funded in 2002 by Majed Al-Sabah who has been dubbed “sheikh of chic” since, or international upmarket department store chains like UK-based Harvey Nichols (with exclusive license to Al-Tayer Group, one of the largest luxury fashion and jewellery companies in the Middle East), have been stepping up. For those driven by hard cash, this is no time for thinking or investing small.
“Everyone thinks our women are wrapped up in veils and chadors. In fact, this is a very liberal and free community”, often complains Kuwaiti prince Majed Al-Sabah, founder of Villa Moda. With sales of $73m in 2006, against $25m a few years back, he has all the evidence he needs. Such figures are the reason global competitors such as Harvey Nichols have been lured to the region.
Al-Sabah has established a collection of 11 upscale “luxury bazaars” across Dubai, Kuwait, Qatar, London, Syria and Bahrain, each with distinctive looks as for the 37 years old Kuwaiti prince, style prevails on size; “the Sheikh” housed one of his outlet in a converted 17th century stable in Damascus’ Old City, opened a 16,500sqm Moda Mall in Bahrain designed by awarded designer Marcel Wanders and hired acclaimed designer Philippe Starck to create his “future luxury street” in Qatar, planned to open in 2010. Villa Moda will also open a 5,000sqm over three levels store in London by 2009, in iconic Art Deco site Battersea Power Station, invading Harvey Nic’s terrain which.
In 2001, Harvey Nics opened in Saudi Arabia with a 8,000sqm site in the Al Faisaliah mall, despite local limitations such as exclusively male sales staffing and competition of men’s traditional clothing.
“Our decision to choose Riyadh for our first overseas outlet is based primarily on the area’s significant market potential,” declared Joseph Wan, CEO of the group. Only later, in 2006, did Harvey Nichols partner up with Al-Tayer Group to open an outlet in tricky fast-growing Dubai, where people have access to all the brands they want in boutique formats and where women are the shopping decision-makers. Its Mall of the Emirates venue is the group’s biggest store outside of London and was launched with crystal clear ambitions: to become the benchmark for luxurious shopping in the UAE. No less than $27m was invested in a 12,500sqm flagship boasting 35 prestigious labels in fashion, beauty and home décor, such as Gucci, Armani, Bulgari, Yves Saint Laurent, Balenciaga and Jimmy Choo, as well as a gourmet food market and fine dining restaurants.
Bulls-eyeing the right costumers
In the luxury realm, names make it all and getting the right label to the right people is key to success: as a global brand, Harvey Nics targets both local and international customers and in that regard, Dubai is the place to be, with its “discerning shoppers for whom luxury is a way of life”, according to Wan who describes the store as a “fitting tribute”, and a profitable one too, as Al-Tayer expects a minimum retail productivity of $1,000 per square foot.
This acclaimed brand awareness, allied to international population reflects in the preference for European labels on the Dubai market. Aware that customers are focused on the hottest and latest brands and are not deterred by higher than high-end prices, Harvey Nichols constantly adapts to ever changing demand, remaining on the look out for the trendy new designer that may catch the eye of demanding Dubai fashionistas.
While also offering European favorite labels – with a distinct Italian orientation (Gucci granted Al-Sabah the first franchise for the Middle East in 1996) – to wealthy, well-traveled and fashion-savvy Gulf clientele, Villa Moda also placed a winning bet on local talents with international recognition, namely Lebanese designer Elie Saab and UAE Zareena, addressing local women keen on supporting regional production.
What’s in a name
“Our name is well known by the people who need to know,” claims Obaid Al-Tayer (whose group was the first to launch a mono-brand designer store in the Middle East with Giorgio Armani in 1993). He is clearly implying that multi-brand boutiques like Villa Moda recognition may not be able to stand up to much-advertised western labels.
“Al Sabah has a lot of equity with the media”, he declared in the press. “We don’t have that same sort of media hype, but we do employ 1,000 people. That’s our whole focus: managing luxury, not manufacturing hype.” The UK-based brand can focus on running the machine efficiently, confident that its trade name is well supported by heavily referenced and highly recognizable concepts such as the Harvey Nichols Food Hall and the Beyond Beauty zone, both present at the Dubai spot.
So in order to confront global players like Harvey Nichols, Villa Moda had to build a brand as strong as the fashion labels it represents. In that perspective, the launch in Bahrain of the first Moda Mall in 2007, housing 160 boutiques and dining facilities among other things, was a decisive step: in the constantly evolving fashion environment, the venue has been designed so that to hail an enduring brand, with a massive and gothic ‘M’ aiming at providing a sense of “rich, corporate and timeless royalty”. The whole point is to create a large following of dedicated customers to the Villa Moda concept – exclusive environment, high level of service, tailored attention – itself. Since its Kuwait outlet, listed among the best ten fashion destinations in the world, is famous for its high-frequency customers who turn up two to three times a week and spend over $600 a time, it’s probably safe to say that Villa Moda is on the right path.
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