Middle East: magnet for foreign brands and retailers

During the global economic crisis that hit the Middle East about five years ago, Dubai was proclaimed “finished” - only to emerge even stronger. Similarly, not many international brands and retailers would have thought of investing here.

Now, the situation is very different and everyone wants a piece of the Middle Eastern pie.

Danish fashion brand By Malene Birger opened its first store in Doha, Katar already last November and German fashion house New Yorker as recently as this month. American youth fashion brand Hollister and parent company Abercrombie & Fitch are scheduled to open their first stores in Dubai in 2013 and 2014, respectively, while German clothing company Tom Tailor already opened a flagship store in Kuwait in May this year. Luxury brands Prada and Gucci both recently signed joint venture agreements with Al Tayer Insignia to develop a retail network across the Middle East in the coming years. The list goes on.

Fashion, art and shopping on the horizon

French luxury group LVMH even goes a step further and invests in a mega mall for fashion and the arts in Abu Dhabi whose opening will coincide with that of the Guggenheim Museum in Abu Dhabi in 2017. The first World Luxury Fashion Week took place in Abu Dhabi in late November of last year and the annual World Luxury Expo in Dubai in January of this year was all focused on fashion. With so much of attention, a good time for international luxury brands and retailers especially to have all eyes on the Middle East.

The United Arab Emirates and especially Dubai are all set to become a “super-regional powerhouse” with “compelling opportunities” for luxury retailers argues Mortimer Singer of Marvin Traub Associates in his Business of Fashion article “Why luxury brands should still believe in the UAE” published on Monday.

Dubai is the world’s retail hub

“[Dubai] is the financial center of the Middle East and the main link between Europe and the United States on the one hand, and Asia on the other,” confirms Tony Salame, Chairman and Chief Executive of Lebanese luxury clothing chain Aishti. But not only that, before Hong Kong, Singapore and even London by 2015 as is estimated, Dubai will be the world’s largest travel hub.

No wonder then that Dubai already has the world’s highest concentration of luxury retailers - after Hong Kong for now. Chinese travellers already appreciate Dubai and come in droves, resulting in the fact that at least one sales person at some of the largest retailers is fluent in Chinese. But the UAE is also multicultural – only 20 percent of the population are Emiratis; the rest comes from other Arabian countries, Europe, Asia and Africa.

Accessories are booming

And the fact that Emirati women have to wear the abaya – a long cloak - in public is also no deterrent to fashion sales as Singer points out – they simply wear Chanel, Gucci, Prada or Dior underneath. Accessories also play an important role, “the only means for her to show off in public,” explains Singer. “It’s no surprise, then, that shoes and bags make up an even greater percentage of total sales than in other parts of the world,” he adds.

Not only that, according to A.T. Kearney’s 2011 Retail Apparel Index, with 785 dollar, the UAE also had the highest fashion clothing sales per capita annually in the developing world. “High disposable income and immense fashion consciousness” were the factors that the report attributed this high amount to. With the UAE’s retail sales estimated to grow from 31 billion dollar in 2011 to 41 billion by 2015, it is certainly those who believed in the purchasing power of the Middle East who will have the last laugh.

Image: Fashion Avenue at Dubai Mall / Pyb