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Luxury Retail in UAE

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CASE STUDY LUXURY RETAIL IN UAE 1/27/2014 By: Anu and Sakshi 1
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Page 1: Luxury Retail in UAE

CASE STUDY

LUXURY RETAIL IN UAE

1/27/2014By: Anu and Sakshi 1

Page 2: Luxury Retail in UAE

LIST OF CONTENTS

1. Luxury retail in the world

2. Overview of UAE

3. Luxury retail in UAE

4. Value dimensions of luxury retail in UAE

5. Opportunities and challenges of luxury retail in UAE

1/27/2014By: Anu and Sakshi 2

Page 3: Luxury Retail in UAE

LUXURY RETAIL - WORLD

Top shopping destinations of the world (September 2013)

1. New York

2. Tokyo

3. London

4. Kuala Lumpur

5. Paris

6. Hong Kong

7. Buenos Aires

8. Vienna

9. Dubai, UAE

10. Madrid

1/27/2014By: Anu and Sakshi 3

Page 4: Luxury Retail in UAE

LUXURY RETAIL - WORLD

Opportunities to be tapped

Effective product differentiation

Continued high-quality standards

Careful distribution

Holding the price line

Tighter cuddling of the customer

Smart marketing

The mantra this year too – to treat the customer likefamily and, in return, get almost unconditional love

1/27/2014By: Anu and Sakshi 4

Page 5: Luxury Retail in UAE

LUXURY RETAIL - WORLD

Major challenges

Higher taxes in France and the United States

Slowing demand in China and Europe

Counterfeiting

Store overexpansion

Product overexposure

Over-reliance on Flash (social media)

1/27/2014By: Anu and Sakshi 5

Page 6: Luxury Retail in UAE

UNITED ARAB EMIRATES

Geography

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Page 7: Luxury Retail in UAE

UAE OVERVIEW

Politics: Stable, safe and liberal

Economy: High standard of living because of oil wealth;diversification has dampened the shocks of oil price fluctuations;the UAE is a regional trading and tourism hub

International: Tension between the UAE and Iran over disputedGulf islands; the US treats the UAE as an ally in its fight againstmilitants

Fourth largest Arab League economy United Arab Emirates

Non-­oil GDP growth is driven by transportation, finance,tourism, service and real estate sectors

BCG report says that out of 1000 households, 40 householdsposses private wealth of at least $1 million

1/27/2014By: Anu and Sakshi 7

Page 8: Luxury Retail in UAE

UAE OVERVIEW

Modern

Escalating urbanization

Offers luxurious lifestyle to expatriates

Surge in economic growth of 4.4% in inflation (2012)

Banking, tourism and trade expected to grow at 3% (2012-2015)

in which tourism tops the list

Retail sector contribution to GDP of UAE is 14% and it will

further grow by 7%(2011-2015)

Data shows that UAE is well ahead of BRICS in luxury retail

UAE luxury retail grew in revenue by $581 million

Impressive economic growth, rising household consumption,

increasing willingness to embrace new retail experience1/27/2014By: Anu and Sakshi 8

Page 9: Luxury Retail in UAE

1/27/2014By: Anu and Sakshi 9

The UAE respondent’s views on the meaning of luxury

26%

22%

20%

11%

10%

7%

4%

0% 5% 10% 15% 20% 25% 30%

luxury is a lifestyle

more about quality than price

Everything over and above what you youneed

Something that appeals to your sense

Time to do exactly what you want

Others

Do not know/refused to answer

Page 10: Luxury Retail in UAE

LUXURY RETAIL IN UAE

Aspirational behavior and preference for international luxury brands among expatriates, tourists and young locals are alike and is high

It is strongly increasing by various shopping carnivals and events as well as rapid development of modern retail infrastructure

Per capita consumption of cosmetics and fragrances in the UAE is one of the highest in the world

Luxury goods are priced high because of less competition and higher consumer base. This is not logical considering that UAE is tax free. This has to do with geopolitics, bilateral trade conventions and constraints set by national government

1/27/2014By: Anu and Sakshi 10

Page 11: Luxury Retail in UAE

LUXURY RETAIL IN UAE

56% of expats receive a disposable income of over US

$3,000 per month

Average household spending power in the UAE stands

at $14,400 per annum, according to property consultant

Colliers International

UAE consumers spend a lot on food and beverages

1/27/2014By: Anu and Sakshi 11

Page 12: Luxury Retail in UAE

OPPORTUNITIES FOR LUXURY RETAIL IN UAE

Traditional affinity towards luxury and an increasing appetite of bothyounger generation and mature consumers for top global brands

The increasing ‘intra-region’ tourism and the emirate’s ability toattract foreign luxury consumers – mainly Russians, Indians andAfricans

The new Dubai Design District, which aims to cater to the needs ofthe fashion industry and is in line with the objectives of the TourismVision 2020.

The middle class is disappearing and the rich are getting richer

Chinese people are traveling to Dubai, and they are buyingproducts of luxury brands

Massive expansion of malls, new projects and infrastructuredevelopment

1/27/2014By: Anu and Sakshi 12

Page 13: Luxury Retail in UAE

1/27/2014By: Anu and Sakshi 13

The Distribution of Gross Leasable Area, 2010

Page 14: Luxury Retail in UAE

CHALLENGES FOR LUXURY RETAIL IN UAE

Rising price of food, rent, education and transportation- middle rung are not going to buy branded stuff

Too many malls - increased competition

High retail rentals

To keep inflation under control

High level of employee turnover and joblessnessamong nationals

Counterfeit brands and difficulty to take legal actionagainst them

Shoppers will expect easy-to-navigate ecommerce andmobile commerce offerings

1/27/2014By: Anu and Sakshi 14

Page 15: Luxury Retail in UAE

1/27/2014By: Anu and Sakshi 15

YEAR Users Population % Pop.

2000 735,000 3,750,054 19.6 %

2003 1,110,200 3,750,054 29.6 %

2005 1,300,000 3,750,054 34.7 %

2009 3,558,000 4,798,491 74.1 %

2010 3,777,900 4,975,593 75.9 %

2012 5,859,118 8,264,070 70.9 %

Internet Growth and Population Statistics in UAE

Internet Growth and Population Statistics

in UAE

websites for online shopping in UAE

was souq.com, cobone.com,

amazon.com, and markavip.com

Page 16: Luxury Retail in UAE

KEY DIMENSIONAL VALUES

Functional and physical attribute- design, quality,

recognition and reputation

Emotional - buying experience, flexible payment

method, soft benefits, buying convenience, bargains

with activities, promotions and prizes

Symbolic – related to travel, place, shopping center

1/27/2014By: Anu and Sakshi 16

Page 17: Luxury Retail in UAE

ADDF

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Page 18: Luxury Retail in UAE

Wafi city spaDeira Gold Souq

JBR hotelRaffles hotel

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Bastakiya

Anantara Dubai

Anantara Abu Dhabi

Madinat Jumeira

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Page 20: Luxury Retail in UAE

Danat Jebel Dhanna Resort Al Maha Aromatherapy and Rasoul treatment

Medical tourism

Dubai Marina

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Page 22: Luxury Retail in UAE

Dubai Outlet Mall Palm Dubai

Dubai World

Mushrif Mall Abu Dhabi

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Page 23: Luxury Retail in UAE

Cultural heritage of UAE

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Page 24: Luxury Retail in UAE

Cayan Tower Princess Tower JW Marriott Marquis

Yas Viceroy AD

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Page 27: Luxury Retail in UAE

Luxury villas Luxury cars

Luxury electronics

Luxury apparel

1/27/2014By: Anu and Sakshi 27

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Luxury watchesLuxury perfumes

Luxury cosmetics

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Page 29: Luxury Retail in UAE

Key luxury distributors in UAE

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Page 30: Luxury Retail in UAE

Upcoming luxury projects in UAE

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