Chalhoub Group to see slowdown in growth this year

Abu Dhabi: Chalhoub Group, a Dubai-based distributor of luxury retail, is expected to see a slowdown in business this year on the back of global economic concerns, falling consumer spending, and a change in the tourist mix coming to the UAE.

Patrick Chalhoub, co-chief executive officer of Chalhoub Group, said that he expected to see single digit growth this year compared to consistent double digit year-on-year growth the company has seen in the past few years.

“We have enjoyed very strong growth since 2009. This year is a much tougher year, and I think that in the next one or two years, we’ll still have a tougher period with an economy that is now reaching a certain maturity level,” he said.

Speaking to Gulf News, Chalhoub said that he projected the company’s growth rate in 2015 would be between 5-7 per cent.

“We have to acknowledge that today there are some challenges we’re facing. We have a challenge in the mix of tourists coming to this part of the world, and tourists that are less savvy in terms of luxury brands; we have a challenge with people who are worried about oil prices going down and the overall political scene — it’s not that incomes have changed, it’s just the mindset of people being worried,” he said.

Russian visitors

With fewer Russian tourists visiting the UAE on the back of a drop in the rouble, Chalhoub said that such a trend will impact the Group whose main product offerings are in the luxury segment.

“The Russian customers were very savvy in luxury products. We see more Western Europeans and Americans coming into the market but it’s not their first instinct to buy [luxury products] when they come here as they’re more inclined to go to the beaches.

Having said that, we have an interesting demographic in the new [tourist] mix and we have to cater to them … We’re trying to adjust and adapt our sales team to the new customer that we’re seeing,” Chalhoub said.

He added that the group has worked on adjusting its prices as many customers felt that prices were high especially after the depreciation of the euro.

As for his outlook for 2016, Chalhoub said that he expected the current market to be “the new norm”.

“When you are living in mature countries, you do not expect double digit growth year after year. I think the era of double digit growth is probably over, but we’re still in a very dynamic, young, savvy market so I’m very confident but I don’t think we’ll see this wave of growth in the coming few years,” he said.

Latest outlet

Chalhoub was speaking on Sunday at an event in Abu Dhabi’s Yas Mall to mark the opening of the group’s latest outlet, Tryano — a 20,000-square-foot department store offering over 250 local and international brands. These include Dior, Giorgio Armani, Givenchy, Kiehls, Tom Ford, Dyptique, Laura Mercier, Molton Brown, and Van Cleef and Arpels, among others.

The CEO said that the company is currently in talks with various brands to bring them to the Middle East, but none of these deals have been finalised yet.