Dubai luxury retail market looks to turn around 2009 figures

Retailers and mall owners in Dubai typically reported a 20% decline in retail sales in 2009 as customers cut back on spending, especially on high-end items, according to a recent report by Jones Lang Lasalle. The report said the local market was seeing a shift away from luxury goods with 'increased emphasis on competitive pricing, creative marketing programmes, convenience shopping and value for money'.

The slowdown in the number of people visiting the emirate also has been a major challenge for luxury retailers in the emirate, as the market is very much geared towards tourism, says Fflur Roberts, Luxury Goods Manager at Euromonitor International.

However, the luxury retail sector is showing signs of resilience, partly due to the nature of consumption in the UAE. 'The Middle East and Asia are very likely to be one of the only regions in the world which will continue to aspire to luxury despite the economic downturn,' Roberts told AMEinfo.com. 'Image is simply that important in the UAE, especially in Emirates like Dubai which has been entirely conceived and developed around the concept of luxury, leaving its inhabitants strongly influenced by image and social status.'

While many luxury brands have lost some ground in Europe and the US, driven by an overall trend towards mid and mass market brands, opportunities in Dubai will remain substantial for those who are willing to give enough time for the economy to fully recover, he noted.

Bin Hendi sees rebound

Luxury retail sales in Dubai slumped as a result of the downturn and may never reach the levels that were seen during the boom period a few years ago, but the market is starting to pick up, especially among certain brands, according to Mohi-din Bin Hendi, president of retail conglomerate Bin Hendi Enterprises. Earlier in the year sales at Bin Hendi's luxury outlets were up 20%-25% compared to last year, he said, noting that the summer period is always a bit slower compared to the rest of the year. 'So far this year our sales are matching our targets,' he told AMEInfo.com.

The luxury products that remained the most resilient throughout the downturn were those with the most name recognition, he contends. 'People everywhere, not just in Dubai, will always want to buy certain brands, certain products. Major brands will continue to do well in these times, while brands that are less well known will suffer,' he said.

Despite the impact of the slowdown, Dubai is still the luxury capital of the Middle East and will continue to be for the foreseeable future, he contends. 'A billion people close by - from India to Iran to Jordan - have bought into what Dubai is all about. They know they don't have to go to Paris or Milan to find luxury,' he said.

That sentiment is borne out by a 2009 survey from research consultancy CB Richard Ellis, which ranks Dubai second worldwide in terms of global retailer presence. The emirate attracts 55% of international brands, just behind London, which attracts 56%, the survey found. Paris and New York ranked third and fourth respectively.

Luxury sales rise

The Rivoli Group also sees promising signs in the luxury retail market, with customers visiting their shops more often and showing more confidence. 'When we look at the last 12 months, 2009 was a challenging period for most luxury brands,' said Abraham Koshy, the group's general manager. 'But since everyone knows that in 2009 the overall economic climate was all about global uncertainty, weakness and downsizing, the numbers realised within that economic environment have to be viewed in that perspective.'

'However since the beginning of this year sales have picked up and Rivoli has had a very strong first quarter. We have experienced double digit growth over last year same period,' he added.