Dubai has been called the leader in luxury fashion retail of the Arab world. Reports indicate that almost 30% of the nation’s GDP comes from the luxury fashion retail industry which amounts for almost USD 7.6 billion as per the data of 2013 (Business Mart UAE, 2013). In the coming years he states that the luxury fashion is expected to grow, but the impact of Covid-19 virus cannot be ruled out.
Introduction of the luxury fashion retail industry in Dubai
Dubai has been called the leader in luxury fashion retail of the Arab world. Reports indicate that almost 30% of the nation’s GDP comes from the luxury fashion retail industry which amounts for almost USD 7.6 billion as per the data of 2013 (Business Mart UAE, 2013). In 2018, the data as per Dubai Chamber of Commerce shows that USD 12.3 billion (Arabian Business, 2019). The Middle East, especially Dubai has also the highest per capita spending on the luxury retail sector. According to study, the growth of ecommerce and globalization has led to an increase in sales and awareness and people from all around the world are gaining popularity of Dubai’s luxury sector. The shopping festival held each year accounts for strategic marketing done by the Government, which has positively impacted GDP as well as growth to the tourism sector of the nation. David Macadam, the CEO and vice-chairman of the Middle East Council of Shopping Centres state that Dubai Mall accounts for almost 50% of the sale of Luxury goods with the top global fashion brands featured in it. In the coming years he states that the luxury fashion is expected to grow, with Dubai being the highest concentrated of brands than any other city in the globe (Fashionbi LTD, 2015).
How most of the luxury retail brands are teaming/partnering with the online sector?
Ecommerce nowadays is the booming business in all over the globe. Shopping through digital platforms saves enough time and energy so that the consumers can concentrate on other activities in their life. It must be pointed out that especially with the current situation of Covid-19, where lockdown and social distancing has become mandatory, ecommerce has seen massive surge. The concept of “retail therapy” is strongly applied when consumers now are cooped up at home and are facing psychological issues of personal crisis (Columbus, 2020). Attending the luxury fashion needs of consumers have seen impertinent now. Statistics suggest that there has been a growth rate of 16% in the luxury sector in the UAE region (Statista, 2020). The most recent event is the launch of ecommerce portal Ounass, which is a luxury shopping portal featuring the popular international brands for the consumers of UAE and the GCC region. The portal is also providing 2 hour delivery period for Dubai and same day delivery options for some (Barnard, 2020).
How the marketing team is focusing more on promoting the company goods through powerful local social media influencers?
Under lockdown situations, the consumers are shifting their buying pattern from physically buying to online buying. This change in the shopping behavior of the consumers overnight has led to the popularity of social media influencers in the fashion industry. Social media influencers are able to engage a large population of audiences online. As per global marketing companies like Luxe Digital, social media influencers are used to provide authenticity, status and high net worth to the brands (Luxe Digital, 2019). They state that the influencer market is now USD 12 billion annually catering only to the luxury brands; the brands choose their influencers according to the message they give to their followers and their follower base and numbers. According to an article (Mediakix, 2020), Chanel had invited the top social media influencers from Instagram to Grasse, for the marketing for the iconic perfume Chanel No. 5. The main goal was to increase awareness for luxury goods through a large online audiences.
Changing on the client telling segment from targeting tourists such as Chinese/Russians, to focus more on local and the expats customers who lives in Dubai.
One of the important evolutions and shift that the luxury retail fashion industry has noticed is that the industry has become a local identity, when representing Dubai. Shopping is a culture that is deeply embedded in the Emirati culture and almost 90% of nationals go out shopping almost regularly. This is an important figure as most of luxury retail shopping is now focused more on the nationals and the expats living in the region. Other factors which have contributed to this focus is the presence of young age group, where almost 50% of the population is under 30 and concentration of wealth therefore is massive. Reports (Chalhoub Group, 2016)suggest that 50-57% of the UAE population spend almost USD 100 per day. Thus, it is only profitable for the luxury companies to focus on the nationals rather than the tourists who visit only in particular seasons.
How the luxury fashion sector is coping with COVID-19 situation?
As mentioned earlier, the Covid-19 situation has shifting the consumer mindset and buying behavior in a major way. The economic impact is the worst that most industries are facing now due to the coronavirus. According to a report by (Jain, 2020) the luxury fashion retail industry is bound to go down by 30-40 billion Euros globally. However, in order to ensure survival every industry must adapt to the changing market situation. The involvement of ecommerce as seen earlier is the most strategic step so far, as buying pattern has shifted online to a great extent. Experts say that this change in the shopping behavior may be the new ‘normal’ in times to come. Therefore, huge digitization efforts has been taken up by the industry. Most private labels like Louis Vuitton, Christian Dior and Givenchy have turned their perfume facility into making hydrochloric gels for the public (BBC News, 2020). Armani has turned its unit to making face masks, PPE and other supplies required for the hospital staffs (Reporter, 2020). Most companies have also partnered with logistics providers to maintain the supply of goods to the public as long as possible; these include air freight, sea freight and also roadways. To conclude therefore, it can be said that the cope up, is not so much with respect to the consumers, but the survival of the luxury fashion companies, so that they can keep their workforce employed even at crisis situations.