BW Confidential - Issue #11 - September/October 2012 - (Page 57)

Prestige retailing Market watch: Middle East Revamping retail More players are focusing on building more profitable pointsof-sale rather than wide-scale expansion, while in-store services and merchandising are improving by Alex Wynne F rom its boom days in the “noughties”, to industry-wide streamlining after sales dipped in 2009, Middle Eastern prestige beauty retail seems to have reached a plateau. From full-on expansion mode, many players have turned to concentrating on increasing sales in existing doors, especially in Saudi Arabia and the UAE, while expanding in less-mature markets in the region, albeit at a slower rate than in the pre-2009 period. “The market has not slowed down, it is more that it did not have any retail organization [before], and there was a need to develop this,” distributor Creation president Serge Kotovsky comments. “Many players came onto the market at the same time to grab market share. Expansion is not so necessary now because the market is well supplied with retail.” Although expansion is slowing for many of the region’s homegrown players, international department stores are still seeing potential, with plans to launch stores there over the next few years. “I would say that in the next year or two we are going to see that quicken up a bit more again,” Clinique Middle East brand manager Shari Jafari comments. “There will be some developments, but definitely not as fast as you were seeing eight to 10 years ago.” UK retailer House of Fraser is to open in the Middle East, while French department-store operator Galeries Lafayette has also announced plans to open a store in Doha, Qatar by 2015. The French retailer opened its first outlet in the region, in The Dubai Mall, in 2009. Consolidation from local players In terms of local players, Chalhoub Group, one of the market leaders with its Faces chain of perfumeries, has been consolidating its store network and reviewing its operations since 2009. The group has opened a retail academy s Paris Gallery is focusing on improving service, product range and quality and now has exclusive format stores (top), with high-end brands and a spacious layout in Saudi Arabia and launched a new store concept with an aim to put across a more vibrant image. “We close or relocate underperforming stores and continuously scout for better locations,” the group’s retail chief operating officer Fadi Jabbour reveals. The group operates 71 Faces stores across the region, and will open the chain’s first door in Iraq later this year. It also operates 27 beauty concessions in department stores, including Saks Fifth Avenue. According to Jabbour, sales across both businesses increased 19% in the first half of 2012, compared with the same period in 2011. Saudi Arabia accounts for 50% of its beauty sales. The group also operates Sephora’s 22 doors in the region via a joint venture with the LVMH-owned perfumery chain. Two further Sephora doors will open later in the year. Paris Gallery, meanwhile, which claims to be the market leader, has slowed down its store openings in its main markets: the UAE, Saudi Arabia and Bahrain. The group will, however, open a new door in Qatar, where it already has two outlets, later in the year, and potentially one more in a few years, company ceo Mohammed Abdelrahim Al Fahim reveals. The group will also enter a new market with its first store in Baku, Azerbaijan, late this year or early 2013, he says. In Saudi Arabia, department-store operator Hussein Gazzaz & Co. began renovating its 30 outlets last year and is opening smaller mall-based stores in a bid to better n n n 57 September-October 2012 - N°12- BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #11 - September/October 2012

Cover
Contents
Comment
Update
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Collistar ceo Daniela Sacerdote
Insight: Fragrance Creation
- Category overview
- Industry factfile
- Viewpoint
- Emerging markets
- Naturals
Wellness
- Spas management
- Spa case studies
Retail
- Sephora & emerging markets
- Store concepts
Digital focus Pinterest strategies
Strategy spotlight Trends to inspire
Market watch: Middle East
- Regional overview
- Industry viewpoint
- Prestige retailing
Radar Six up-and-coming beauty brands
Packaging Trends in luxury
Last word Sagentia's Peter Luebcke on devices

BW Confidential - Issue #11 - September/October 2012