The Fragrance industry is considered an important arm in Chalhoub’s business, one for its major importance in this part of the world and second, being the startup of the company’s activity in terms of distribution in Kuwait many years ago. What can you tell us about the International Group of Luxury Fragrances and the objective?
We, at Chalhoub Group, have set ourselves on a mission: to increase the consumption of western fragrances in Saudi Arabia to grow the Western fragrance market in Saudi Arabia. The Kingdom of Saudi Arabia has one of the highest per capita consumption of fragrances in the world and Saudi nationals are known for their sophisticated usage of fragrances as part of their daily ritual, yet only 45% of perfumes used and sold are Western Fragrances.
As the leading partner for luxury across the Middle East we aim to help our partners gain more business by growing the Western Perfume market in KSA by 30-50% over 5 years and quicker than the overall Saudi fragrance market
Therefore, the International Group of Luxury Fragrances was created with the aim to present to the consumer the multiple opportunities within the Western Fragrances. This Group is supported by well-known members of the perfume world with longstanding expertise in international fragrances.
A consortium of reputable beauty distributors and retailers of international fragrances in Saudi Arabia established the International Group of Luxury Fragrances as an initiative to help consumers in the Kingdom of Saudi Arabia appreciate the western fragrances. The Group is dedicated to enriching the olfactory experience with a deeper understanding of international fragrances.
The main idea was to look at this initiative from all angles in a neutral way. We saw the need to involve all related parties such as: retailers, brands, distributors, mall developers, and of course perfumery experts and consultants e.g. Luca Turin, Michael Edwards and Prestige Consulting. With all of them being part/supporting IGLF we can ensure to be neutral without highlighting a specific brand but rather focusing on promoting the international fragrance market in Saudi Arabia.
How do you assess the luxury fragrance industry today in our markets?
The luxury fragrance market has changed a lot. Western fragrances were inaccessible. Today there is much more choice of perfumes available to the consumer. Thanks to the digital world, consumers are very well informed about what is happening all over the world and tend to want to follow the latest trends and fashion while embedding them in their traditions.
Up until the 90’s, perfumes were sold in traditional, independent perfumeries. Then regional chains, including the Chalhoub Group’s own concept Wojooh, started to emerge. In the retail boom of the 2000’s, international chains (Sephora) as well as department stores (Saks, Harvey Nichols, Bloomingdales) entered the market. Today, about 60% of the GCC beauty market is a structured, professional market with a mix of locally grown chains and international franchises. Also, fragrance brands still rely on local distributors in each country to sell their product to the retailers. These distributors, among which is the Chalhoub Group, add value to the brands by ensuring marketing activities, staffing & training brand promoters (beauty advisors) in stores, and organizing the supply chain and logistics.
You’ve always taken major roles in building cultural bridges between the east and west. Have you thought of distributing the Oriental fragrances to the west through concept stores that belong to Chalhoub and based in Europe?
We always believed in the potential of the region; our parents had the desire to bring the French culture and its savoir-faire to the Middle East. Throughout the years we have built brands in the region while acquiring an intimate knowledge of the markets and consumers. We are always seeking new opportunities and markets. However, for the time being we want to focus on the markets we already operate in and reinforce our knowledge and expertise in it. The Middle East market, a vibrant and fast growing market represents a great opportunity for the luxury industry.
What’s in the pipeline for the IGLF? What’s next after KSA?
The vision of the IGLF is a long term one. Every year we will launch various initiatives to educate and engage the consumer about different aspects of Western fragrances. After the initial campaign launched in September 2014 entitled “Your Fragrance… Your Presence”, which encourages changing perfumes when you change outfits, we have launched this year our second campaign highlighting Western Oud exhibitions in Saudi Arabia, showcasing the Fragrance offerings to the consumers and the amplitude of Western oud perfumes which are available via in-mall consultations, media and special offers.
We want the consumers to be closer to the possibilities of Western fragrances. The variety within Western fragrances allows them to change their perfumes depending on the occasion and their mood.
In line with our aim to support our partner brands in the region, we took a commitment of growing the market of western fragrances by 30-50% in Saudi Arabia
Today you manage more than 400 stand-alone retail outlets; can you give us an overview on the luxury goods market in the GCC?
The GCC luxury market is estimated at $ 7.6 billion with a growth of 11.8% versus 2013 and versus a global market estimated at $ 303 billion with a growth of 2% versus 2013.
This market is innovative but at the same time knows a lot of changes: social, economic and cultural.
At a consumer level, we have seen a shift from a consumer focusing on the price to a consumer looking for choice and more recently to one looking for a unique shopping experience.
On a market level, the retail sector of the region has seen a shift from souks in the 1960’s to regional distributors in the 80’s. In the 1990’s the monobrands started to settle through franchises. In the 2000’s we saw the arrival of the international department stores. Today, the consumer is looking for width and depth in the choices, therefore the return of the multibrand stores with a more specialised offer. (For example Level Shoe District.)
The Middle East luxury is very promising and is becoming a center of attention. This market benefits from a young population, with shopping rooted in the culture and traditions.
What kind of challenges do you face today?
The GCC luxury consumers are following their own journey rooted in their particular lifestyle and societal codes. They are passionate about luxury yet demanding and assertive. They will expect from brands to deliver a hyper-experience in a self-contained world, which will turn a trip to the store into a journey in itself. Sales people will need to become story-tellers of their enchanted journeys.
The customer is becoming increasingly knowledgeable, demanding and volatile. Thus, we have to offer a real experience, real knowledge and real storytelling. The customer is also less loyal due to having many options of interacting, traveling and variety of choices in the market.
The store is expected to become an extension of the home with large spaces including private areas, comfortable seating and the legendary Arabic hospitality. It needs to be digitally enhanced, enabling easy screening of the whole boutique, pre-booking, e-commerce and virtual trials simultaneously shared online.
Customers want to be recognised when stepping into the boutique, their tastes and needs anticipated. Omni-channel will be a must with seamless integration of the in-store experience with the online experience and social media platforms.
Products will have to be launched in the Gulf at the same time as in the West – to the minute including special lines for Gulf customers in terms of sizes, cuts, shades and scents and these will be launched exclusively in the Gulf or ahead of the global market.
Retailers will need to nurture their relationships with their customers by celebrating the bond by building on the power of family and friends and becoming part of their customers’ legacy.
In order to be able to accompany luxury Gulf consumers and anticipate their aspirations, luxury brands will have to face these challenges by tapping into the societal fabric, which sets the path for a very specific consumption journey.
The other aspect is that we have to be extremely consistent in the way we present the overall story of the product, pricing, service, etc. The client is increasingly exposed and thus we address this by maintaining a coherent and consistent high-quality level of experience.
Other challenges include Human Resources and finding the right, talented people, and subsequently training and developing them.
Lastly, we would add the soaring costs of operating and remaining competitive.
In terms of high-street retailers, when there is a winning formula it is often copied and imitated; we have to always remain quite innovative, creative, bring new ideas, concepts, products and exclusive products. Thus, we seek to always challenge ourselves and continue innovating.
Who are the buyers in the luxury front, and what do you think is still attracting foreign customers from abroad? Like Chinese & Russians?
Through the studies conducted by the Group, our main consumers being GCC Nationals, we were able to identify 3 consumer archetypes: the gazelle, the horse and the falcon.
The gazelle is fashion forward, brand savvy, curious and demanding, ‘gazelles’ look for self-expression through luxury. They will typically search for the unique in the range of well-known brands and tend to be more adventurous than others with lesser known designers, brands or products. Characterized by a high activity on social media, they go online to keep up to date but also to share, post and blog their own opinions and advice. They look up to other fashionistas and bloggers as well as Western trendsetters and celebrities.
The horse is status-oriented ‘horses’ and characterized by a constant showcase of superiority through their own person or the extensions of themselves, their house, their car and indeed their children. For them, luxury is a means to gain social acceptance and peer praise. Their luxury purchases typically target iconic brands. They are drawn to the most well-known and the most expensive. Their sphere of influence includes their peers as well as sheikhs and national celebrities.
The falcon is an archetype still very much in its infancy; these consumers are distancing themselves from the materialistic world and are beginning to appreciate luxury for the experiences and the enjoyment it can bring. They typically have a passion they like to share and look for specific objects more than brands. Of all possible influences, they are particularly sensitive to personal relationships whether with family, friends or sales people.
With regards to the tourists, we have seen a decrease of the number of Russians. In fact, the currency exchange rates, the geopolitical events in Russia and the Ukraine and oil prices are particular challenges for now, but Russians shop in Dubai for convenience and incredible choice while Chinese tourists are looking for price savings.
I recall meeting you several years ago where you mentioned a dream project that was in the pipeline then, and today it is LEVEL shoe district. How did the concept come to life, what makes it unique apart of its massive space and do you have any plans of branching out this success project to more GCC countries?
The dream was to create a Shoe Haven for men and women who are looking for choice, expertise, vibrancy, for people who are passionate about shoes.
Level Shoe District is a one stop destination for shoe lovers, an obsession that is ever growing with consumers. Through 9000 sqm our objective was to create the Shoes world with everything in mind, all the brands (over 350), all the styles that can come to mind (casual, formal, evening, high end and bridge), the services that can accompany it (cobbler, podiatrists, stylists) in a very lively environment. The space is curated with this in mind, we keep the customer informed, we are in touch with the customer online and offline to ensure that the offer answer to their needs and therefore the complicity is strong. With Level Shoe District we created a space for the community of shoe lovers.
For the time being, we have no plans to duplicate Level Shoe District. However we will be launching by the end of the month e-commerce platform taking the Level Shoe District experience online.
What’s an objective you still aim to achieve at Chalhoub Group?
We have always set objectives to ourselves and team members while keeping in mind our values of respect, excellence and entrepreneurial spirit. On one hand, we aim to continue building brands in the region with passion and excellence; to be their preferred partners in the ME. On the other hand, we want to continue investing in our people giving them the right tools and motivation to grow, and maintaining it. We aim to offer our guests a unique and exceptional experience that they will never forget. We also aim to be engaged and continue giving back to the region and its people who have offered us so much in the past 60 years.
What’s your personal motto?
Always better with passion.
What’s an advice you give young entrepreneurs on achieving goals?
Persistance and patience.
What does luxury mean to you?
Craftsmanship, quality, know-how, refinement.
We know you as an icon of success in the business world, may we have a glimpse on the following:
Your favourite travel destination?
Places in Patagonia, Chile and South of France.
Book you are reading now?
Islam vs. Islam
What is a lesson you learnt from your father that you made sure to pass on to your son?
There are 5 steps in the life of a working man: You learn how to do; then you do; you teach how-to ; you make do; and then you let do.
And since we started by fragrances, we will end by what is your favourite scent?
The scent of Nature: Jasmine, Orange Blossom, Violet. The scent of Life.
