Where are luxury brands in the Gulf going wrong in their digital strategy?

Gabriel Chahine, Partner with Strategy& and the leader of the firm’s consumer and retail and health practices in the Middle East, believes the higher end and affordable luxury are relatively performing well. The bigger challenge lies in growing the top-line of the mid spectrum.

 

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Luxury brands operating in the Middle East market are under pressure and are witnessing a significant softening for the first time in a decade. Is this a challenge or an opportunity?

The economic slowdown in the region is sparing no industry in the region including luxury. All luxury brand owners are facing challenges to navigate this period that is difficult to predict – and likely to continue into 2018-2019.

Within the spectrum of luxury segments, the higher end and affordable luxury are relatively performing well and showed resilience. The bigger challenge lies in growing the top-line of the mid spectrum.

These uncertain times represent an opportunity for the leading brands to first optimize their go-to-market in an environment where cost of doing business, especially in Saudi Arabia, is going up – our estimates suggest an increase of 10-20 per cent over the next two years.

This environment presents another important opportunity to expand the product portfolio to penetrate untapped segments (like women for luxury watches) or to attract the growing segment of the younger population.

 

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Where are luxury brands in the Gulf going wrong in their digital strategy?

We will focus on the customer-focused angle (not the back office). The luxury brands are still working on offering a distinctive and unique luxury digital experience for their customers – this is different than the one related to mainstream products.

This unique digital experience goes beyond just showcasing the products: it needs to reflect the heritage and values of the brands on one hand and provides a seamless omnichannel journey.

Does going digital runs the risk of backfiring or not giving expected ROI for some luxury brands in the region?

Going digital is not an option. The luxury brands have multiple options to pursue such as leveraging many emerging luxury online platforms and working closely with their partners and agents to make the digital transition economically viable.

The interview is part of the cover story that appeared in the November 2017 issue of Gulf Marketing Review.

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