Van Cleef and Arpels, the French luxury retailer, sees the Middle East as a prime destination for high-end shopping.
Luxury brands pin hopes on Middle East
Van Cleef and Arpels, the French luxury retailer, sees the Middle East as a prime destination for high-end shopping. Stanislas de Quercize, the president and chief executive of Van Cleef and Arpels, said in the next two months it would open four stores in the GCC; two in Kuwait, and one each in Qatar and Bahrain. Those four represent one half of the total number of stores to be opened by of the company worldwide this year.
The company already has three stores in the UAE. Mr de Quercize said the retailer was eager to establish a foothold in the region to prepare for the GCC's future growth. "This is the region in the world where the 21st century is being built and we want to be a part of it," he said. Luxury sales worldwide have suffered during the economic downturn as consumers shy from discretionary purchases. Such sales will shrink by 8 per cent, to ?153 billion this year from ?167bn last year, the business consultancy Bain and Co says.
But Bain says the Middle East will be a bright spot for future growth, with 30 per cent of the estimated 300 new luxury boutiques to be opened worldwide going to the region. "The main reason it seems to attract a lot of high-profile brands in the luxury sector is it still has a nice amount of wealth being created in the region, and a high concentration in the GCC," said Laurent-Patrick Gally, a retail analyst at Shuaa Capital in Dubai.
And while the region has been hurt by the global downturn, the region's vast oil reserves offers a layer of protection for local economies. "You still have oil close to US$80 a barrel and that creates a lot of surpluses across the region, which have a spillover effect to the local populations and help generate jobs," Mr Gally said. TB McClelland Jr, the president and chief executive of The Luxury Marketing Council in the Middle East, said luxury brands are looking to the region because it represents only about 2.5 per cent of the total expenditure on luxury goods worldwide, so there is plenty of room for growth.
Mr de Quercize cited ambitious projects in the UAE, such as the Louvre and Guggenheim museums in Abu Dhabi, as signs of a resilient economy. He would not disclose sales figures but said he is confident that in tough economic times, consumers will flock to high-quality luxury brands with the few purchases they make. "What is the effect of the crisis? You are more discerning than you were before," Mr de Quercize said. "It's a shock, then you think more, and you buy less."
That resilience is not helping gold jewellers in Abu Dhabi and Dubai, who have seen sales fall dramatically this year, largely because of record high gold prices. Some traders say sales dropped last month by more than 50 per cent. But Damas, the largest jeweller in the Middle East, said the drop in its sales is easing slightly. @Email:email@example.com