‘Luxury sector is much more resilient than people think’, says Chalhoub Group | Video

World Finance interviews Patrick Chalhoub, co-CEO of Chalhoub Group, about global developments in the luxury brands sector

May 9, 2014

Despite the economic crisis of 2008, the luxury sector has thrived, with corporations such as the Middle East’s Chalhoub Group benefiting from prolific global demand for their products. The company’s co-CEO, Patrick Chalhoub, talks to World Finance about the group’s work in the Middle East, what’s attracting Chinese and Russian customers, and whether any external forces can close down the luxury sector.

World Finance: Now I’ve named just a few of your clients Patrick, can you tell me some of the others?

Patrick Chalhoub: The Chalhoub Group today have about 30 percent of the market share, with brands as extraordinary as Chanel, Christian Dior, LancĂ´me, and in gifting, Bachhara, Bernado and so many of the other brands that make all the women so excited, and desirable brands.

World Finance: Patrick, why do you think high end retailers have sought out strategic partnerships rather than opening their own shops locally?

Patrick Chalhoub: Our role as the partners of luxury brands is to really give them an insight about the market and how the market has developed. Adding to that, there is a complexity in doing business in our part of the world, and within this complexity, part of our job is to try to simplify the way the brands would be able to operate, to give them common areas of support in terms of back offices, human resources management, and the most important is to plug in resources people who could be trained and who have the understanding and the knowledge both of the market and the luxury industry.

[W]e have seen an influx of Russians who are coming
to Dubai

World Finance: Dubai has really become a retail hub for Russian as well as Chinese high-end customers. Can you tell me, what are the Russian buying, what are the Chinese buying?

Patrick Chalhoub: It is true that, since the opening of the Russian market about 15-18 years ago, we have seen an influx of Russians who are coming to Dubai. They enjoy the luxury brands experience, they focus their buying really on fashion. They are very much fashion-oriented, clothes-oriented. Definitely they would buy also shoes, handbags, but they are very much into the fashion, and very knowledgeable about the best of the brands which exist. The Chinese are not yet into clothes and fashion, they are much more into the accessories, they are more into the bags, shoes, but very much branded. Often with a calculator, in order to see if the prices are competitive, and they are, but looking more of the choices which could exist.

World Finance: Which luxury sectors have seen the most growth?

Patrick Chalhoub: The bags are the way, I would say, our consumers are expressing the fact that they are linked with the luxury brands and fulfilling it, but it is moving slowly to the other areas of the luxury fashion products. Very recently it’s really about shoes. Women are becoming absolutely crazy about shoes, so there has been a huge shoe development into the industry.

World Finance: The luxury retail sector thrived in spite of the 2008 economic crisis. Is there any external force that can slow down the global luxury retail market?

Patrick Chalhoub: Obviously if there is insecurity, everything could stop. But once there is a certain stabilisation of the situation, and even into difficult economic situations, we are seeing that the consumers are still looking for luxury products, not extravagancy, but something which is accessible, and this is what has happened when we have seen the events happening in Asia. In spite of what is happening there are people who still have a certain amount of wealth and who will be spending it. So then it’s for us to adjust our offers or adjust our marketing in order to be able to approach them. Luxury is much more resilient than people think, if we know how to adapt it to the situation of every moment.

[T]here has been a huge shoe development into
the industry

World Finance: Now when your company was started 50 years ago you were one of the only luxury retailers in the region, but of course the marketplace has changed quite a bit and there are more competitors. How has that changed everything?

Patrick Chalhoub: As a leading partner of luxury into the Middle East, our role is often not only to play with the other competition and try to grasp market share, but to try to also expand the market, develop the market basically, because if we develop the market we have room for us and the other. I strongly believe that the more we have competition, and Dubai is a place where I have competition from all over the world, the more it keeps us on our toes, and it keeps the customer even happier because he will have ample offers, and ample answers to his demands.

World Finance: Do you have any plans to expand internationally?

Patrick Chalhoub: I don’t dream just to be present wherever we have to be present. The Middle Eastern market offers ample opportunity, because we have a young population, which is coming to the marketplace. We have a middle class in the making, which is accessing the consumer world and the luxury world. So what we are extremely focused on is this development in our part of the world, and make sure that we capture this development rather than have some aspiration but do well at what we have to do.

World Finance: Patrick, thank you.

Patrick Chalhoub: Thank you, I appreciate it.