Not so long ago, Reema Al Khomeiri, a Lebanese entrepreneur based in Abu Dhabi, was enjoying brisk business, with her label-obsessed customers snapping up 150 to 200 designer goods a month. Recently, the numbers have been trickling in, and she’s lucky if she gets more than 40 orders every month.
“The demand has decreased. In the last nine months, I think everybody has been hit by something,” says Al Khomeiri, owner of ToujoursChic, which buys and sells used luxury bags and accessories from highly-coveted brands.
The local economy is now rebounding with the business sector showing positive sentiment and job opportunities increasing. More tourists who are drawn to the UAE’s luxury stores have visited the country recently. The good times may be here again, but it seems the lower end of the luxury scale is not so much in the mood for a shopping spree yet.
Middle-income consumers in the UAE who can afford to splurge on less pricey Ralph Lauren or Coach are still holding on to their purses, as rents have increased, along with the cost of food, accommodation, transportation and education. The ultra-wealthy, on the other hand, who have the economic means to sport the most expensive collections of Chanel or Louis Vuitton, are still buying.
Industry sources predict that luxury spending will continue rising this year but the demand will be sustained mainly by the ultra wealthy. The high-end market in the UAE is highly fragmented with almost all of the major international brands present.
According to Euromonitor International, the luxury sector enjoyed a good year in 2012. The market size for high-end apparel, jewellery, accessories and electronic gadgets, among others, expanded by 9.2 per cent, from Dh6.5 billion in 2011 to Dh7 billion last year.
That was the highest growth recorded so far since the market suffered severely during the economic crisis of 2009 and 2010. This year, luxury consumption is forecast to grow but at a slower pace, by 7 per cent, and sales are likely to hit $2 billion (Dh7.6 billion).
The global landscape is not so different. Worldwide luxury sales are anticipated to grow only about four to five per cent in 2013, a report by Consultancy Bain & Co. showed. Last year’s data painted a better year in 2012, when sales revenues went up by 10 per cent.
“There are people buying now, but we don’t see as much customers as last year,” a salesperson at a luxury shoe store in Dubai Mall told Gulf News yesterday. “People are postponing their purchases until the next round of shopping promotions such as Dubai Shopping Festival, Dubai Summer
Surprises. It’s not only us experiencing this. Most of the brands in the fashion avenue are saying the same thing,” she added.
Saint Honore, a high-end brand synonymous with “Paris style”, offers watches, jewellery and accessories. Its CEO, Olivier Birault, said that while there is a slowdown in the lower end of the luxury segment, they are seeing a positive trend. Chinese and Russian buyers, in particular, have been snapping up their collections.
“The first five months of the year have been quite strong in the four major Middle East markets – UAE, Saudi, Kuwait and Qatar. But we’ve noticed some difficulties in smaller markets due to the uncertainty in the region and the challenging times in Europe,” he said. “Going forward, we are still expecting a double-digit growth in the Middle East markets,” he told Gulf News.
Takahiro Miyazaki, general manager of Citizen, said the first quarter of 2013 exceeded their forecast. The positive sales were buoyed both by high tourist and domestic spending.
“Among the tourists, Indians and Chinese are our biggest buyers, followed by Americans and Europeans. (Among UAE residents), we have not observed any drop in spending on watches, in fact customers are now looking for more expensive and exclusive products,” Miyazaki said.
