Michael Chalhoub: «There is enormous potential in Saudi Arabia.  Customers open to new brands»

Michael Chalhoub: «There is enormous potential in Saudi Arabia. Customers open to new brands»

“Two-thirds of Saudi consumer spending was concentrated abroad, in the shopping capitals. The pandemic that has forced them within its borders and the progressive evolution that Saudi Arabia is experiencing have certainly had an impact, bringing most of the purchases back to the domestic market. And the potential is enormous: the country, at the moment, is not even among the top three for spending on luxury products in the area». Michael Chalhoub, president of Strategy, Growth, Innovation & Investment and Joint Ventures of the Chalhoub Group, offers an accurate look at the levers that have brought the Middle East – for years overshadowed by the boom in China – among the priorities of international luxury. The group, founded in 1955, is one of the main distribution partners for luxury brands (Lvmh, Coty, Luxottica) in the Gulf countries with over 700 shops and 40 e-stores. And it is ready to land in the USA with Level Shoes.

Saudi Arabia market driver (exceeding 10 billion)

Chalhoub underlines the potential of a Saudi Arabia where the implementation of the Vision 2030 program is taking shape, but confirms how the entire Middle East has once again become central to the luxury market: «In 2021 the market for personal luxury goods in the countries of the Gulf (Gcc) has risen to 9.7 billion dollars, up 23% on 2019, and this year the 10 billion wall has certainly been breached”. On the one hand, the merit goes to a “young, willing to spend” local clientele. And on the other side of the tourists who, today more than ever, frequent the Emirates: “Since 2021 there has been a record growth in tourists and their spending on luxury products has risen a lot”, observes the manager. Which confirms the large presence of Russians: “Their presence has already increased in 2021 and I expect an increase in 2022 not only in Russian tourists, but also in residents”.

The evolution of the local clientele

The international clientele gives an important boost to sales, but it is on the evolution of the local one that Chalhoub emphasizes: «Consumers are looking for brands that help them build their identity. And despite being attracted by the big names, they are also open to the idea of ​​trying out new products and brands». This, according to the manager, happens above all in the beauty products segment: «This is why we launched the new Beauty Nation format, a concept store with independent brands, which is having a lot of success».

Knowing how to reach consumers in their countries is increasingly crucial: «To do this, we need to use a glocal strategy, with ad hoc events and perhaps products. And hybrid dialogue must not be missing: 100% of interactions with our customers last year had an online point of contact».

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