Taking steps forward into concept stores and capturing a growing online market.
Patrick Chalhoub is the co-CEO of Chalhoub Group, the luxury retail and distribution company started by his parents in 1955 for the Middle East. Since its founding, with the opening of the first Christofle boutique in Damascus, Syria, Chalhoub Group has emerged as a powerhouse in luxury retail in the Middle East and has paved the way for Dubai-based distribution. 1965 marked the move of the Chalhoub family and activities to Beirut because of the economic uncertainty, and then in 1975, due to the civil war in Lebanon the group had to move its activities to Kuwait. The invasion of Kuwait triggered the move of the group’s activities to Dubai in 1990, where the successful and growing group has been based since. With a growing workforce of more than 12,000 employees, implemented in 14 countries, and a network of over 650 retail stores, the group has flourished from its humble beginnings in Damascus, and as their business has grown, so has their portfolio of brands. Today the family’s name has become permanently linked to that of its partners Dior, Louis Vuitton, Christofle, Baccarat, Puig and many more.
Spread across fourteen countries, the company’s stores are a mixture of franchises, joint ventures, and Chalhoub Group’s own concept locations, such as the Level Shoes at Dubai Mall, a shoe metropolis spread across 97,000 square feet. The curated space is divided into 40 designer boutiques, and four multi-brand areas. The group also operates Tanagra, a lifestyle gift chain with nine stores, Wojooh, a beauty shop offering fragrances, make-up and skin care, and their recently launched Level Kids. Spanning over three floors of retail space with over 200 brands, the children devoted store offers specialised services, including a spa, photo studio, birthday room, interactive classroom, and of course a Very Important Children (VIC) room.
Patrick is a man in the know, being privy to priceless information about what makes the market tick, making him a force to be reckoned with at the helm of this internationally renowned, luxury group. Here, he exclusively shares his time and insights with us.
What would you say are the invaluable factors needed to uphold the groups luxury edge?
I think that today we are living in a world where things are changing so quickly and drastically, so what you say today is perhaps irrelevant tomorrow. For that reason, we have to be creative and innovative, especially with a company the size of ours, which is far more complicated compared to if you were working on a small start-up company. With 12,000 employees, it is more difficult to run and move, and you need to be very agile to stay ahead. An entrepreneurial spirit instilled in everyone is also imperative, so if we want to stay at the edge we need to empower all members of staff, to ensure we keep the company fresh and forward thinking.
Has your creation of concept stores been a reflection of the region entering a new phase of luxury development?
As a group, we have always tried to be very understanding of how the market and consumer is evolving, and we have seen a big shift as our consumers mature and become more self-aware. There was a time when consumers only related to head to toe single designer outfits, which is perhaps a little over now, as the consumer becomes more assertive, wanting more choice, allowing us to enter a new era. The customer today is shifting and expects more, so our group felt it was important to capture this evolution, with our concept stores. The other perspective is that it is impossible to open a store in every mall, so the concept store allows brands to have a presence in many places, but tailored in a different way for different places. So, we have mixed the ambition of brands, together with the evolution of the customer.
Was childrenswear always a sector you were looking to branch into? Has it been a successful move?
We know that in the Middle East, customers give a lot of attention to their children, possibly spoiling them with beautiful garments, so we are aware that this is an important area to represent. We originally had a few freestanding stores, which were successful, and this gave us the impetus to create a store that offers an incredible experience, like a wonderland. The key was to encompass all children’s age ranges, and offer every brand, from high end designer to contemporary. We achieved this with Level Kids, a visually and interactive concept store, which really captures the customer. The goal is to create more traffic, as because the location isn’t in a mall it doesn’t naturally have such a high footfall. However, through feedback, we can understand that Level Kids has become a must have landmark for tourists to visit in Dubai, due to its unique concept in a unique destination, which can’t be replicated elsewhere.
Tell us about your fragrance concept, Ghawali?
Ghawali for us is perhaps a different perspective that we have taken. As a group, we have been very strong, and leaders in the western market, but did not have a presence in the oriental market. So, four years ago, we realised that we could not be absent from what makes up almost 50% of the fragrance market, and because of this we decided to make a store with these, although from this we decided to create our own product, something that we haven’t done before. The whole idea was to give a contemporary look to an oriental fragrance. We have launched seven scents, and within these are oils and moisturisers, with the hair oil surprisingly being the strongest seller.
You have started with Aubaine in Food & Beverage, are there any further plans to expand in this domain?
As a group, we remain extremely focused on fashion, beauty, and gifts. Entering F&B is more to complement what we currently offer, as our customer always wants somewhere which is both inviting and welcoming, and F&B is naturally part of this experience. Our aim is not to just enter the sector for the sake of it, but to see if we can add value. For that reason, we are very excited about a new signing that we have just acquired, Dylan’s Candy Bar, a chain of pop-art inspired stores with the flagship being in New York City. The fun concept was pioneered by Ralph Lauren’s daughter Dylan, and also sells related lifestyle products and personalised gifts, making it the perfect fit for our group. It is both luxury, but also playful and joyful. These are the collaborations that excite and interest me, as it is something different to bring to the region, rather than just replicating a restaurant.
Do you feel the constant demand to self-improve?
Today, yes as you don’t have a choice. You must always move forward to continue creating a journey, as if you are not relevant and meaningful to your customers, with a quality of knowledge, then they don’t need you. So, a lot of our investment goes into training our staff, and creating a shopping experience with a point of difference.
Tell us about the Chalhoub retail academy?
We started about 10 years ago, and have opened four academies’ in the different cities of the Gulf. For us it has really been a way of making sure we have a minimum level of expertise, as our staff come from all over the world with many different levels of experience and education. The initial stage of learning is to ensure we offer a consistent service, and this can then be followed up with higher levels. The academy is a key element to what makes our retail successful.
What do you feel are the necessary tools to help your employees grow and remain motivated?
Today we need to give our employees the capacity to prove themselves to themselves, giving them empowerment so they can express their own competence. Many of our new colleagues are highly motivated, and we need to make sure we give them enough space and opportunities to grow and achieve, whilst still ensuring that we don’t lose our own DNA. This allows us to benefit from their desire to prove themselves.
How important do you feel a flawless retail experience is to the Chalhoub brand?
When we speak about luxury we speak about fulfilling a dream and aspiration. So, you must put it in context through visual merchandising, the team, and the spirit. We aren’t just looking for a cashier, we need a sales person who can interact. As customers become more knowledgeable, they look for assistance from someone who understands more than just the brand, someone who knows the whole sector and trends. This broader knowledge is what sets us apart and satisfies the customer.
As customers have an increased knowledge, does this put more pressure on you?
As the customer knows more, they are looking to be able to experiment mixing and matching. This is where a retailer like us can share all our knowledge and expertise. Which is very captivating, although it can be more challenging.
The original buzz around Dubai and its luxury growth has slightly died down. Do you still see abundant growth opportunities in the region?
I see huge opportunities in the region. The trouble was that prices became too high, which harmed retail and slowed down the movement of sales. But I would say that this is getting rectified, as hotel room rates are going down, and the price of luxury goods today are becoming more competitive than before. Other things that didn’t help Dubai, was that it was lacking an individuality, however with the creation of our concept stores and the new City Walk, this differentiation is being made. What also makes me optimistic is that Dubai is a young population, and increasingly a population at work who want to prove themselves, and this positive energy will be reflected. Together with this, the infrastructure in Dubai is growing, creating more experiences, and consequently sustaining the region as a luxury retail platform.
Is there more demand for an innovative approach to keep Dubai as a retail hub?
Absolutely, it is not only the concept, it is our approach to marketing, and with the customer, and how we portray it which must be increasingly different and more innovative.
Has the evolution of digital made an impact on you? How do you balance online with offline effectively so that they complement each other?
There is a combination of elements. Firstly, the internet became very important as a way of communicating, as people became more interested in social media and becoming digitally connected, which we must capitalise on. However, when it comes to e-commerce it is true that some customers have resisted, wanting to continue experiencing the feeling and touch before buying, especially with luxury items. Online has also allowed the customer to compare price differences, which of course keeps competition with other retailers healthy. However, because of how we have evolved, it is very hard to focus on just one aspect, and in our eyes both online and offline should live and work together. At our group, we are still at the beginning of this digital transformation, and I’m sure we will face barriers, especially concerning how we can give the same customer service online as we do offline in our stores, however I know that we will learn from both aspects.
What is the biggest challenge you see facing the Chalhoub Group in the coming years?
It is to assemble this online and offline experience, and make it work seamlessly in harmony.
By Eliza Scarboroug