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CASE STUDY
LUXURY RETAIL IN UAE
1/27/2014By: Anu and Sakshi 1
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
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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
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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
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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)
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UNITED ARAB EMIRATES
Geography
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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
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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
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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
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
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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
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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
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The Distribution of Gross Leasable Area, 2010
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
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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
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
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ADDF
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Wafi city spaDeira Gold Souq
JBR hotelRaffles hotel
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Bastakiya
Anantara Dubai
Anantara Abu Dhabi
Madinat Jumeira
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Danat Jebel Dhanna Resort Al Maha Aromatherapy and Rasoul treatment
Medical tourism
Dubai Marina
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Dubai Mall, Burj Khalifa,
The Address, Dancing Fountain
Dubai Shopping Festival
Dubai Summer Surprises
Mall Of the Emirates
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Dubai Outlet Mall Palm Dubai
Dubai World
Mushrif Mall Abu Dhabi
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Cultural heritage of UAE
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Cayan Tower Princess Tower JW Marriott Marquis
Yas Viceroy AD
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Kidzania
Dubai Acquarium
Dubai Ice Rink
Sega Republic
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Reel Cinemas Ibn Battuta Mall
Miracle garden Burj Al Arab
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Luxury villas Luxury cars
Luxury electronics
Luxury apparel
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Luxury watchesLuxury perfumes
Luxury cosmetics
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Key luxury distributors in UAE
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Upcoming luxury projects in UAE
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