New reality for GCC luxury retail: ‘Build digital strategy or lose relevance’

The GCC luxury players have to devise and implement long-term, comprehensive and genuine digital strategies in order to remain relevant. Luxury brands in the region also need first to figure out the digital luxury paradox: how to protect their luxury fundamentals in a digital environment.

This is according to the white paper ‘Luxury in the GCC: Age of Digitalisation?’ launched today by Chalhoub Group, One of the leading players in the Middle East luxury retail.

Co-CEO Chalhoub Group, Patrick Chalhoub, said, ““Our strategy is to get a better knowledge of our audience and initiate a real dialogue with them, both physically and digitally – because the future of luxury cannot be one of the two: consumers’ experience must seamlessly connect offline and online. It’s a major transformation for the retail scene, which will have to restructure itself accordingly. Those who want to endure have to get ready, and get ready now, or risk being left out.”

The omnichannel, including cross-platforms e-commerce capabilities, is the road forward, offering to the new generation of Arab consumers the unique experience they seek, added the white paper, which comes at a time when the Gulf is now confronted to the digital revolution sweeping across the Middle East, and the world.

Additionally, digital has massively disrupted and transformed the way business is conducted. From marketing strategies to return on investment measurement, it has infiltrated all aspects of the work, across all kinds of companies – and luxury is no exception.

Moreover, the paper added, technological innovations prompt shifts in consumption habits and even societal (r)evolutions, all of which brands need to keep up with. The current era is characterised by a shift of power from brands to consumers who master their preferences and choices pressing the brands to review their strategies.

To remain relevant in the face of this dramatic, steady and rapid change, luxury has to reinvent itself digitally and tell a new story for the modern consumers, noted the white paper.

“Internet is instrumental in transforming GCC luxury consumers who now are very aware of labels, prices, trends and products, and can find almost any item on the web. Faced with this level of volatility and exigence, we all have a lot to do, from adapting our websites so that they are user-friendly and accessible, to training our teams to be fully involved in the omnichannel, as the store and the digital properties now must complement one another – all the while protecting the brand’s DNA. It’s a learning curve, but in one way or another, we are all moving forward in that direction,” added co-CEO, Chalhoub Group Anthony Chalhoub.

Other key findings of the Group’s research in the GCC included:

– Although e-commerce in the region has been lagging at 2.6 per cent of total retail sales vs 7 per cent globally in 2015, with luxury products’ online sales amounting to only $200-$230 million and 2.5% of the segment’s total sales in the GCC, the e-commerce contribution to the Gulf high-end market is expected to reach a total value of $1.5 billion within four years;

– The Gulf luxury world is transforming. People under 30 now form half of its population and are informed, educated, tech-savvy and digitally connected. Indeed, the region boasts some of the highest Internet, smartphone and social media penetration rates in the world;

– These modern consumers have new expectations, and care about experiences more than brands. They also expect a highly personalised and streamlined path to purchase, regardless of channel or device;

– They extensively research products and trends on the net, readily taking advice from online influencers, whose clout is ever increasing;

– They are extremely assertive and want to be part of the conversation;

– Meanwhile, young and creative entrepreneurs are remodelling the GCC luxury scene;

– Acutely aware of the need to address this new retail landscape, international and regional pure players, along with luxury specialists and large retail groups are actively establishing digital platforms across the GCC.

The launch event of the white paper was also followed by a round table discussion, moderated by the owner of World of Content Nathalie Bontems. The panel included Chalhoub Group co-CEOs and other industry experts such as the CEO of The Luxury Closet Kunal Kapoor, and the global social media director of Socialyse, part of Havas Group, Simon Jenkins.

The panel delved deeper into issues such as the role and significance of social media influencers in brand marketing, the challenges of adding the personalisation touch in online as well as offline marketing, the digital challenges in the region, especially addressing the changing needs and aspirations of the customers, and so on.