As extremists swarm and states in the Middle East collapse from within, it is high time to ask if geopolitical dynamics are impeding the economic growth of the region. An expert panel of judges sat down at this year’s Arab Luxury World forum in Dubai to debate the major trends.
Panelists included Adil Hassan al-Fardan, board member of Al Fardan Jewelry, Gary Dugan, head of investment strategy at National Bank Abu Dhabi, Cyrille Fabre, partner in Bain & Co., Ludovic Tiberghien, head of strategy at Chalhoub Group and Andrew Williamson, head of retail for the MENA region for Jones Lang LaSalle.
Moderated by the BBC’s Nima Abu Wardeh, the agenda included a macro review of the luxury market and an in depth discussion of consumers, regional economies and tourism, especially in light of the tumbling oil prices recent months have seen.
Diversification is key, agreed most panelists, when it comes to businesses staying afloat as well as government spending.
“Governments have to spend but may choose to spend differently,” Fabre said, adding that family businesses in the Gulf region have diversified to counter risks. This has been done, he said, by diversifying services and expanding away from the luxury niche and spreading into other GCC countries as well as Russia and Turkey; “it is a natural way of managing risk in this part of the world,” he noted.
Cyrille disagreed, saying focusing on the top brand in a company’s portfolio was key considering the high competition. Tiberghien agreed, saying he wished his company had taken such a route in the past.
Williamson contended that while risk is undeniably linked to instability in the region, developers tend to have a long term view, citing the case of Egypt which has seen political upheaval in recent years but is seeing “huge amounts of development happening now…Egyptians bought land when it was inexpensive and are now getting to work.”
Diversifying clientele will also go a long way in keeping business alive, Willamson noted, saying “it would be wrong to get too negative.”
“Middle classes are on the march in India and China,” he noted, saying business should target those consumers who can’t find the same luxury experience in their home countries.
Relying on certain consumers can curb risks in other ways, Fardan added: “There will always be the ultra-high net worth individuals who keep the economic cycle going. Once you capture this target market, you can move your business into the future.”
The Arab Luxury World event takes place from June 1-2 and brings together industry leaders from sectors such as watches and jewelry, fashion and accessories, perfumes and cosmetics, premium cars, tourism, art and culture.
The event comes on the back of Chalhoub group’s estimate that the consumer yearly spend on beauty, fashion and gifts per capita in the GCC is close to $30,000, ten times what is being spend in some European countries, making a discussion on the future of the luxury market in the region crucial according to organizers.SHOW MORE