Entering the Middle East? Chalhoub shares what works

Editor’s note: This story is excerpted from our exclusive report Driving revenue in the Middle East: Saudi Arabia and UAE. To obtain a copy visit our reports section. Breaking into the Middle East requires ambition, insight, and the right partner. And no one delivers quite like Chalhoub Group. A leading luxury partner in the Middle East, Chalhoub Group has been instrumental in introducing top brands to the region. This year alone, it opened the first Jil Sander store in Dubai and brought its expansive portfolio of joint venture brands, including Loewe, Louis Vuitton, Dior, and Sephora, to Riyadh’s new Solitaire Mall. Through joint ventures — regional agreements that enable co-management between the brand and the group — Chalhoub leverages its expertise and extensive reach to support retail expansion, localized marketing, and operational excellence. Charbel Lahoud, vice president of growth and business development at Chalhoub Group, shares what it entails to enter the market through this model. Jing Daily: Many luxury brands choose to enter the Middle East via a joint venture with Chalhoub. How does this streamline the entry process? Charbel Lahoud: Today, it’s easier to set up operations in the Middle East directly, in particular in the UAE. But then it is very complicated to expand beyond the UAE. With over 70 years of doing business in the Middle East, the Group has an unmatched knowledge of the region and its ever-evolving consumer. When we partner with brands, we are a strategic partner of the brand. Based on the market data we have, we craft strategies to build the brand in the region (and not specific to one market). We look at the long-term potential of the partnership. JD: What does this partnership look like in practice? CL: The business development team travels regularly to the key fashion capitals to scout for brands, by attending fashion shows, going to brand’s showrooms, etc. We sometimes follow brands for two, three years before suggesting a partnership in the Middle East. Once we think that a brand resonates well with our consumers and has a potential in the Middle East, we start by working on a joint business plan, we then discuss commercial terms and then start working on the contracts. For a franchise, this process takes three to six months. For a JV, this process takes on average six to 12 months (excluding setting up a new legal entity). JD: What are some recommendations you can offer for entry into Saudi Arabia? CL: For prestige beauty brands, the easiest way to enter the Kingdom of Saudi Arabia (KSA) is through distribution in the selective beauty stores, such as Faces or Sephora. For luxury fashion brands, the multi-brand scene is not developed in KSA. Thus, a brand needs to be ready to open standalone stores in KSA. We usually recommend a franchise agreement to start since the ticket is high for a joint venture (i.e. capital injection of $8 million required). Read more: Why sportswear is surging in the Middle East Chinese travelers chase thrills and culture in the Middle East The new faces of Gulf luxury: Young, rich, optimistic

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Entering the Middle East? Chalhoub shares what works