‘Ramadan rush’ brings Gulf retailers to Europe

Knightsbridge might be dominated by British department store stalwarts such as Harrods and Harvey Nichols, but affluent customers from the Gulf wandering down Sloane Street during London’s so-called “Ramadan rush” will also find a retail concept conceived back in the Middle East.

Boutique 1, the Dubai-born multi-brand store, which has operated in the Gulf since 2003, expanded to the UK capital last summer, selling brands including Alaïa, Alexander Wang, Giambattista Valli, Proenza Schouler, The Row and Victoria Beckham. Co-founder and co-chief executive Ziad Matta also operates the Missoni store on Sloane Street as well as a Paul & Joe franchise on Bruton Street as part of his Boutique 1 Group, which expects overall sales of $100 million in 2017.

“There is a big Arab customer base — both Arabs living [in London] and those GCC [Gulf Cooperation Council] nationals who travel [there] during Eid or summer,” Matta says of the store’s London clientele, pointing out that the UAE, Saudi Arabia, Qatar and Kuwait always feature in the top 10 countries claiming VAT refunds from the UK store. “Customers know us and our brand so it’s not something that they would walk past,” he adds.

Likewise, London’s ON Motcomb, the eveningwear specialist store which opened in 2013, is able to leverage the Kuwaiti and Bahraini customer base of its parent store group AlOthman, which has over 60 years’ retail experience in the Gulf. “At first, we had the opportunity to develop our London business with the help of the loyal customers of AlOthman Kuwait and Bahrain who are mainly Middle Eastern,” says managing partner Rachad Tabiat, adding, “Since the opening of ON Motcomb, we have also managed to cultivate a growing number of international clients.”

Matta emphasises that Boutique 1’s London store and website, which offers same-day delivery in the UK capital, is ultimately focused on a local client base. “We haven’t opened in London to cater to the same customer in Dubai,” he says, pointing out that the south end of Sloane Street has more of a neighbourhood feel than the tourist-dominated Knightsbridge end.

“Obviously it is a Dubai-born brand and we are proud of that fact,” he explains of the Boutique 1 name. “At the end of the day we buy for a luxury customer and not for a specific nationality. We have brought the best of what is out there internationally to Dubai over the past 15 years, which was our initial purpose, and doing it in London is no different.”

This summer, London is an especially attractive destination for visitors from the Gulf, due to favourable currency exchange rates which, combined with the VAT rebate for non-European visitors, can result in luxury goods prices of between 20 and 30 per cent lower than in the Gulf.

“In the past two years we have lost footfall and sales to London due to the local currencies compared to the euro and pound and the pound devaluation, which created a gap in pricing,” says Patrick Chalhoub, joint chief executive of Chalhoub Group, which manages over 400 retail outlets from Louis Vuitton and Dior to its own concepts like Level Shoes and Level Kids.

“London is an attractive destination for visitors from the Gulf due to favourable currency exchange rates.”

He believes that subsequent price adjustments in both markets is helping to alleviate the situation. “The best initiative is to engage and connect with our customers, be competitive in our prices, give them a very adequate and relevant choice and an incredible shopping experience, which will without doubt make it interesting for them to purchase locally,” Chalhoub says of driving sales to his Middle Eastern stores.

Traditionally, the Eid Al Fitr holiday, expected to fall at the end of June this year, marks the start of GCC visitors heading to Europe to escape the intense heat of the Gulf summer. Thus Gulf-based retailers are concentrating efforts on capturing full-price sales before customers leave. “Ramadan and Eid Al Fitr have constantly been the best season for sales in KSA [Kingdom of Saudi Arabia],” says Chalhoub. “We are in a region where relationships are important and gifting is part of the tradition and rituals.

“The post-Ramadan and summer period is definitely an important challenge for Gulf retailers, as most customers travel abroad for their holidays. Our focus is to make sure that they engage before travelling, and during summer we make our end of season and clearance sales attractive for them and the type of tourists who would visit us during the summer.”

Tanya Atkinson, senior vice president of commercial for department stores, home and jewellery at Al Tayer Group, which operates stores including Bloomingdale’s in the UAE and Kuwait and Harvey Nichols in the UAE, says, “During the first half of Ramadan, we naturally witness a slow down in trade, although we do expect this to be mitigated somewhat this year in that residents will stay in the UAE during Ramadan, given that schools will still be operational. Historically business starts to pick up again in the latter half, as we approach Eid, particularly in the childrenswear department and for gift items.”

To pre-empt customers leaving the region after Eid, Atkinson says, “We ensure that new season merchandise is delivered earlier, to encourage our loyal customers to buy their new season wardrobe before they travel so they have their coveted new looks with them.”

Boutique 1’s Matta deploys a similar strategy. “We try to bring in pre-fall [deliveries to the Gulf stores] as soon as possible to cater to our customers before they travel for the summer,” he says, adding, “Now that we have Boutique 1 in London, we’re also able to cater to that customer in London. We expect this summer to be quite good and to be driven by the GCC customer.”

ON Motcomb’s Tabiat agrees that having a London outpost allows the retailer to follow its customers’ spending patterns. “Our London boutique experiences a strong interest during the summer, Eid holidays and other GCC-related formal holidays as most of our Middle Eastern clients are travelling during that time,” he says.

It remains to be seen whether more Gulf-based luxury fashion retailers are eyeing Europe for possible expansion potential and a cushion to counter periods of regional slow down. Matta says, “Our experience shows that if you have a concept that works, there’s no reason why it cannot work in London. We’ve gone in to an area that is arguably saturated. There are strong, established local players but we felt there was enough of a gap and initial results have confirmed our thoughts.”

Chalhoub is more bearish, cautioning that the UK market is very competitive. “But what would make [expansion] successful would be to make sure to also offer a unique concept, product range and experience, to differentiate from the UK retailers… like long and embroidered dresses, Oriental fragrances or other categories which are more focused on our Middle Eastern customers.”

While Chalhoub’s Level Shoes and Level Kids concepts “are gaining traction and their awareness has definitely become international,” he says: “we are not considering any other expansion for the moment and will only do so if we feel that we could offer a totally unique and different experience than what already exists in the UK market.

“Let us focus and succeed first locally and regionally, and then envisage any form of international deployment,” he adds.

Courtesy businessoffashion