Affluent youths attract luxury brands to Middle East(69687)

Luxury brands see potential in youth

The Middle East s young and affluent population is spurring luxury brands such as Mulberry, Jaeger-Le Coultre and Montblanc to target the region for expansion.

Jaeger-Le Coultre, the Swiss watchmaker which has just opened a boutique in Beirut, will open one each in Riyadh and Kuwait next month as well as an outlet in Jeddah by the end of the year.

The British luxury retailer Mulberry opened a shop in Doha in April and will launch another in Dubai this year. Montblanc, meanwhile, opened an outlet in Emirates Towers last week, giving the retailer of pens and high-class trinkets a total of five new boutiques across the region.

Ziad Matta, the chief executive officer of Boutique 1, which has its own line of department stores and the regional franchises for luxury brands such as Mulberry, said the relatively young demographics in the region made it attractive to luxury brand retailers.

There is a huge amount of young people, Mr Matta said. If you look at all the GCC countries, the proportion of people in their 20s is probably the highest in the world. These are the luxury consumers of today and tomorrow. Nicholas Baretzki, the international director for Jaeger-Le Coultre, said the Middle East was one of its key regions for expansion this year, along with Asia. The company planned to open about 10 outlets this year, he said, four of them in the Middle East.

There are a lot of opportunities, Mr Baretzki said. The infrastructure is there, the new malls are there. The clientele is there. It is easy to operate in and that s not just for one country, it s for the whole region. Global luxury sales are expected to increase 4 per cent this year after one of the worst years for the industry last year, according to a study from the research company Bain and Co. Sales of luxury products last year dropped by 8 per cent to 153 billion (Dh686.

42bn). Bain predicts sales will reach 158bn this year, driven by an increase of between 5 per cent and 10 per cent in the first six months.

Mr Matta said sales at his company s stores across the region open at least one year were up about 10 per cent over last year. After launching a Boutique 1 in Mirdif City Centre, the company plans to open six stores in Mall of the Emirates new luxury extension, such as Mulberry and Diane Von Furstenburg shops, he said.

Despite the struggles luxury retailers experienced in the region last year, the brands would continue to eye the Middle East because it has fared relatively better than the West.Another driver of growth is the mandatory local franchisee or joint venture partner for retailers to enter the region, Mr Matta said.

Since these local partners put up the investment and take on much of the risk, it is relatively easy to enter the market, he said.

Godfrey Davis, the chief executive of Mulberry, said the brand was also scouting out potential sites in Lebanon and Saudi Arabia, as its stores in Dubai and Qatar were trading strongly.

Affluent youths attract luxury brands to Middle East

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