Quick recovery of luxury retail in Saudi Arabia: Chalhoub KSA

A report by Statista showed that 62% of the consumers in the Middle East purchased a luxury item last year in the Middle East.

While luxury took a hit and mass retail verticals like supermarkets saw a surge when the pandemic struck, the Middle East has seen a speedy recovery of the segment compared to the rest of the world.

“At the beginning of the pandemic, we saw a big growth in mass, especially in supermarkets where all segments including beauty saw a growth. At the onset, we knew that luxury would take a hit. However, in the Middle East we saw a quicker recovery than most markets,” said Joseph Chalhoub, General Manager of Fashion and Accessories at Chalhoub KSA.

With two-thirds of the population under the age of 35 with a high purchasing power, Saudi Arabia is proving to be a haven for luxury retailers. According to a recent study, that millennials and Gen-Z accounted for almost half of the luxury consumers and one-third of all luxury purchases in Saudi Arabia.

“Saudi’s younger generation has considerable spending power, which luxury retailers can no longer ignore or take for granted. They need to tailor all the experiences to this generation and these high spenders, who are the majority,” he said.

What is Chalhoub KSA doing to connect and engage with its younger consumers? 

The group has been working towards its digital and omnichannel strategies for many years now, which has been accelerated by the pandemic. They have also delved into figuring out the purpose of each of their stores, which is no longer limited to be being a huge venue for transactions but a smaller space where memorable experiences can be created.

“We are constantly thinking of the role of the stores, which will have to change. Today, the store is the point of sale. We want it to be a point of touch. The modern stores will not exist only to facilitate transactions but also allow customers to engage with the products, to develop loyalty and for customers to be our brand ambassadors. The store should also work as a fulfillment centre for e-commerce. This is where we talk about a hybrid store of the future,” he explained.

Chalhoub KSA expansion plans

As a result Chalhoub will be bringing a lot of its experiential concepts and stores to KSA in the near future as well as strengthening its portfolio of brands that already have a presence in the Kingdom.  

“Tanagra is already in Saudi but we want to develop it. We are planning on bringing in Tryano as a department store that will add value to the market. We are also looking at bringing Level Shoes in the market,” he said.

Apart from that, the group is also trying to strengthen its existing portfolio by expanding into the secondary cities of Saudi Arabia including Mecca, Jeddah, Medina, and Dammam. “Faces have always believed in the remote areas and secondary cities and they have a very strong presence there. In fashion and accessories, Swarovski has quite a few stores in secondary cities,” he said.