Montblanc looks beyond its famous pens including perfumes, jewellery and watches in an effort to boost flagging sales in the Middle East.
Montblanc sniffs out a strategy shift
Montblanc is looking beyond its famous pens and expanding less familiar product lines including perfumes, jewellery and watches in an effort to boost flagging sales in the Middle East by up to 15 per cent. The shift follows flat sales in the region for the luxury pen maker last year as consumers became more budget-conscious due to economic uncertainty.
Sonke Tornieporth, the vice president of sales at Montblanc, said this year's extra revenue would come from the brand branching out into different segments. "We expect a minimum growth of 10 to 15 per cent," he said in Dubai during a tour of the region. "Montblanc is a brand which is well established in leather and writing instruments, but we are still pretty young in the watch business. We have big plans to grow with the watches and the jewellery."
The company signed a perfume licensing deal last month with Inter Parfums and would make fragrances under the Montblanc banner. Luxury sales worldwide declined last year by about 8 per cent to ?153 billion (Dh765.97bn) as shoppers shied away from unnecessary purchases, according to the consultancy Bain and Company. Despite this, 30 per cent of the 300 luxury boutiques that opened worldwide last year were located in the region.
Montblanc's sales in the fourth quarter of last year dropped by 1 per cent, results from its parent company, Richemont, showed. The company's global pen sales fell marginally to US$183 million (Dh672.1m) in the final quarter of last year, from $184m million in the same period in 2008. This was an improvement from earlier in the year when sales in the six months to September dropped 16 per cent to $238m from $282m.
Mr Tornieporth said Montblanc's Middle East sales were mainly flat last year, as economic growth in the region slowed. Instead of opening additional outlets last year, Montblanc refurbished and expanded existing locations such as Abu Dhabi Mall and Ibn Battuta in Dubai. The company also closed a handful of underperforming stores worldwide last year, but none in the Middle East, he said. This year, Montblanc plans to add five or six stores, including at least two in the UAE, to the 26 it already has in the region. There is still room for growth, Mr Tornieporth said.
"It is a very affluent market. It is a market where people spend a lot of money on high ticket items, but also it is a rather young market and the growth potential is much bigger than in Europe." Laurent-Patrick Gally, a retail analyst at Shuaa Capital, said double-digit growth was achievable given the number of stores Montblanc planned to add in the region and the improved economic environment compared with a year ago.
"Qatar is still a reasonable economy and Saudi Arabia is no more hurt than it was last year," he said. "In the UAE, Abu Dhabi is still very strong and Dubai is stabilising. Ten to 15 per cent growth seems very reasonable. It's a very strong brand." Bain expects global luxury sales to increase 1 per cent this year and 4.2 per cent next year. Mr Tornieporth said that compared with the brand's 15 per cent to 25 per cent sales increases during the region's boom years, its aim of 10 to 15 per cent growth this year was realistic.
One area of focus is Saudi Arabia, he said. "We still see big potential in Saudi Arabia, we probably have not yet developed the full potential there. And Saudi Arabia, in terms of retail development, is still behind the UAE market and behind the Qatari market." @Email:firstname.lastname@example.org