PHOTO
22 May 2016
Dubai: The jewellery retailer Damas has set its eyes on a Saudi sparkle through an ambitious expansion of its store network in the kingdom. This, the company believes, will deliver higher sales growth and more than compensate for the slowing down the sector has been facing in the UAE.
"We are halfway there in Saudi Arabia, with 20 shops opening in the last 18 months to take the total to 40 by end-2015," said Anan Fakhreddin, CEO. "More will be added, with a new shop getting added every other week. By mid-2017, with the Saudi expansion in place, it can deliver on the kind of growth we aim for."
The timing of the Saudi pivot is interesting. The kingdom's retail sector has been experiencing the same crunch as in other Gulf markets, brought on by the steep dive in oil prices and the fallout this had on consumer spending habits.
When shoppers get thrifty, jewellery buying is not a priority. The latest numbers from the World Gold Council for Q1-16 confirm this is the case with Middle East buyers and similar to the trends in China and India. Even for the whole of last year, jewellery sales had been on a slippery slope.
But Damas foresees tapping interest from enough ultra-wealthy shoppers in Saudi Arabia who remain immune to the gyrations of oil prices. Moreover, the gold and jewellery retail sector is yet to go through the consolidation -- led by the bigger chains -- the UAE has already gone through.
Thus, a fast-track store expansion can place Damas in an advantageous position, is the company's thinking. More so as new malls and shopping centres get delivered, opening up location options for retailers across categories.
But will Saudi Arabia then take over as the top market for Damas by 2017 and thereafter? As of now that looks like a tall ask. Sales in the UAE account for two-thirds of the Damas total, derived from 140 outlets.
"The home market will remain a priority ... what sort of growth will come depends on two factors -- market maturity for the sector and overall GDP growth," said Fakhreddin. "We cannot separate consumer buying from what's happening to the economy.
"The last year has been challenging one for the UAE jewellery retail. The currency exchange rate to the dollar has been a major factor.
"But for well-established brands -- and we are certainly one -- customer loyalty will remain immune to the challenges."
It was in late 2013 that Damas -- owned by Qatar's Mannai Corporation -- launched a top-to-bottom restructuring. It meant the brand directed its energies at being the jeweller of choice for upper-mid to high-end shoppers rather than cast a wider net.
Changes were thereafter made to its store network, which meant closing down underperforming locations and concentrating on more high-end boutiques.
According to market sources, in the absence of heavy tourist spending, jewellery sales this year could remain under pressure. Their contention is that there is only so much year-on-year growth that domestic shoppers can provide.
If so, will a 0-5 per cent growth be the best the local jewellery sector can hope for? According to Fakhreddin, "It depends on a lot of factors ... but we see possibilities in the super-luxury category and that will be a strong focus. And we will grow enough to defend our marketshare in the UAE."
Move over Bollywood, Hollywood is coming
A "Hollywood celebrity" will soon be the face of a new super-premium jewellery collection Damas will launch in shortly. If so, Damas will be taking on the multiple rival retail brands that now have a star from Bollywood fronting their collections.
"The new collection is based on research that mapped the market for gaps," said Anan Fakhreddin, CEO. "There is one that exists in the super-VIP category and that will soon be on our radar.
"The collection will have a distinctive Arab design and flavour, and we will unveil a Holywood celebrity for the endorsement."
© Gulf News 2016
Dubai: The jewellery retailer Damas has set its eyes on a Saudi sparkle through an ambitious expansion of its store network in the kingdom. This, the company believes, will deliver higher sales growth and more than compensate for the slowing down the sector has been facing in the UAE.
"We are halfway there in Saudi Arabia, with 20 shops opening in the last 18 months to take the total to 40 by end-2015," said Anan Fakhreddin, CEO. "More will be added, with a new shop getting added every other week. By mid-2017, with the Saudi expansion in place, it can deliver on the kind of growth we aim for."
The timing of the Saudi pivot is interesting. The kingdom's retail sector has been experiencing the same crunch as in other Gulf markets, brought on by the steep dive in oil prices and the fallout this had on consumer spending habits.
When shoppers get thrifty, jewellery buying is not a priority. The latest numbers from the World Gold Council for Q1-16 confirm this is the case with Middle East buyers and similar to the trends in China and India. Even for the whole of last year, jewellery sales had been on a slippery slope.
But Damas foresees tapping interest from enough ultra-wealthy shoppers in Saudi Arabia who remain immune to the gyrations of oil prices. Moreover, the gold and jewellery retail sector is yet to go through the consolidation -- led by the bigger chains -- the UAE has already gone through.
Thus, a fast-track store expansion can place Damas in an advantageous position, is the company's thinking. More so as new malls and shopping centres get delivered, opening up location options for retailers across categories.
But will Saudi Arabia then take over as the top market for Damas by 2017 and thereafter? As of now that looks like a tall ask. Sales in the UAE account for two-thirds of the Damas total, derived from 140 outlets.
"The home market will remain a priority ... what sort of growth will come depends on two factors -- market maturity for the sector and overall GDP growth," said Fakhreddin. "We cannot separate consumer buying from what's happening to the economy.
"The last year has been challenging one for the UAE jewellery retail. The currency exchange rate to the dollar has been a major factor.
"But for well-established brands -- and we are certainly one -- customer loyalty will remain immune to the challenges."
It was in late 2013 that Damas -- owned by Qatar's Mannai Corporation -- launched a top-to-bottom restructuring. It meant the brand directed its energies at being the jeweller of choice for upper-mid to high-end shoppers rather than cast a wider net.
Changes were thereafter made to its store network, which meant closing down underperforming locations and concentrating on more high-end boutiques.
According to market sources, in the absence of heavy tourist spending, jewellery sales this year could remain under pressure. Their contention is that there is only so much year-on-year growth that domestic shoppers can provide.
If so, will a 0-5 per cent growth be the best the local jewellery sector can hope for? According to Fakhreddin, "It depends on a lot of factors ... but we see possibilities in the super-luxury category and that will be a strong focus. And we will grow enough to defend our marketshare in the UAE."
Move over Bollywood, Hollywood is coming
A "Hollywood celebrity" will soon be the face of a new super-premium jewellery collection Damas will launch in shortly. If so, Damas will be taking on the multiple rival retail brands that now have a star from Bollywood fronting their collections.
"The new collection is based on research that mapped the market for gaps," said Anan Fakhreddin, CEO. "There is one that exists in the super-VIP category and that will soon be on our radar.
"The collection will have a distinctive Arab design and flavour, and we will unveil a Holywood celebrity for the endorsement."
© Gulf News 2016
