“The current offer in the Gulf is not sufficiently tailored to Chinese customers”
12 months ahead of the World Expo in Dubai, retailers of the Middle East are adapting stores and services to meet expectations of a large clientele from China. Patrick Chalhoub, C.E.O. of the Chalhoub Group explains how this works.
Sophie Baqué: In 2018, the number of Chinese visitors to the U.A.E. jumped by 12%. How do you expand to benefit from this influx of clients?
Patrick Chalhoub: In February 2019, Chalhoub launched Middle East Golden Circle on the Chinese social network WeChat, to communicate effectively with Chinese visitors to the United Arab Emirates. In Dubai, we have a team of 3 Chinese nationals in charge of content and marketing, who are working with our Shanghai partner. The Chinese potential is huge, as it is already the 4th largest visitor group after India, Saudi Arabia and the British. For example, 50% of the sales of the Swarovski boutique in the Dubai Mall are from Chinese customers this year. In many stores, we are rolling out Alipay and WeChatPay payment services with encouraging results. Alipay accounts for up to 20% of payments in some stores and it helps enhancing the conversion rate and higher sales with our Chinese customers.
SB: With Vision 2030, is Saudi Arabia moving in the same direction?
Patrick Chalhoub: Yes. The ambitions for tourism are immense, for all nationalities and beyond religious tourism. Saudi Arabia has already significantly increased its capacity (it attracted 12 million visitors in 2018) and the goal is 30 million in 2030. Saudi has introduced new electronic visas for foreigners, which are available in 24 hours. By December 2019, nationalities such as Chinese, Japanese, Americans and Europeans will no longer need a visa to enter the Kingdom.
SB: In Dubai, the footfall of the Dragon Mart is 40 million Chinese visitors a year. How can malls better attract Chinese tourists?
Patrick Chalhoub: The top priority is to focus on experiences, not just products, which can be found anywhere in the world. 20 years ago, in the luxury sector, the dream of any luxury C.E.O. was to have the same store with the same products, displayed in the same manner across all global stores. This is unimaginable these days, as the brand alone is no longer sufficient to capture customers’ money. Many retailers and mall owners are working to build unique experiences. However, in Dubai today, we don’t yet have an offer that’s fully adapted to the Chinese clients, especially in fashion. As rental values of shopping malls have dropped, my recommendation for landlords is to specialise. For instance, the Nakheel Mall (111,500 million sq.m GLA) has a wide range of perfumeries but a relatively small fashion offer. Differentiating factors are also important for community centers, which definitely have to specialise.