Dubai the top spot for luxury spending by Mideast shoppers

Dubai remains the number one destination for luxury spending among Middle Eastern consumers. (File photo: Reuters)
Updated 24 May 2017
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Dubai the top spot for luxury spending by Mideast shoppers

DUBAI: Dubai remains the number one destination for luxury spending among Middle Eastern consumers, according to an American Express survey presented Tuesday at Arab Luxury World, a two-day forum in Dubai.
The survey, conducted by American Express Middle East and North Africa in partnership with international market research company GfK, collected data from more than 700 participants in six Arab countries in January and February 2017.
Participants from the UAE, Bahrain, Qatar, Kuwait, Oman and Lebanon were questioned about their spending habits and future financial plans.
According to the data, 21 percent of respondents said Dubai was their first choice as a luxury shopping destination, followed by Paris and London at 17 percent and 16 percent respectively. The next Middle Eastern country came in eighth, with four percent of respondents saying they would choose Beirut for luxury spending.
The presentation was given by Vice President of the Merchant Business at American Express Graziela Martins as part of a talk on spending trends in the Middle East.
The importance of Dubai as a spending hub was emphasized in an earlier presentation by Cyrille Fabre, partner at Bain & Company, who said that “Dubai is successful and gathering momentum to establish itself as a global hub… It’s already part of the top 15 luxury markets by city globally.”
Fabre praised the local arts and fashion scene, including such events as the Art Dubai fair, for creating the eco-system needed to nature Middle Eastern talent.
This eco-system, he said, contributes to the city’s allure as a destination for luxury spending.
Fabre did, however, warn that more has to be done to retain Gulf buyers, some of whom seek to spend on luxury items in Europe.
The retail market across the Gulf and Middle East has suffered due to oil price fluctuations over the past year, he said, but “although consumers have been negatively impacted by oil prices, we do have a high number of high net worth individuals in the region but we see that the number two nationality for some of the jewelry brands in Europe is the Saudis, after the Chinese, and purchases by people from the Gulf in London has increased quite significantly.
“So, our share of the wallet of our national consumers has dropped. Is it because they feel they have a better customer experience in London?”
Fabre’s advice for the audience of representatives from the premium goods industry was to “think like a millennial.”
The millennial “mindset is contagious. Other generations are also impacted and are changing their behaviors,” he said, adding that enhancing a customer’s experience in the digital world is crucial in order to encourage them to come to a store and buy.
“Seventy percent of all luxury purchases are influenced by one online touchpoint,” he said, quoting Bain & Company research.
“They want deeper engagement, they want a deeper experience both when they are buying and when online.
“People go on Instagram and see what’s trending, what their friends are liking and that’s how people like to engage so we need to integrate social media… I really believe the importance of Instagram here in the Middle East is much greater than anywhere else,” he said.
The fourth edition of Arab Luxury World, which ended Tuesday, was held under the theme “Digital Disruption and Emotional Engagement” and served as a platform for more than 70 speakers from the premium goods and services market to discuss and debate the latest trends in the industry.


BMW plans massive cost cuts to keep profits from sputtering

Updated 20 March 2019
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BMW plans massive cost cuts to keep profits from sputtering

  • ‘Our business model must remain a profitable one in the digital era,’ chief executive Harald Krueger said
  • Total number of employees is set to remain flat at around 135,000 worldwide

MUNICH: German high-end carmaker BMW warned Wednesday it expects pre-tax profits “well below” 2018 levels this year as it announced a massive cost-cutting scheme aimed at saving $13.6 billion (€12 billion) in total by 2022.
A spokesman said that “well below” could indicate a tumble of more than 10 percent.
The Munich-based group’s 2019 result will be burdened with massive investments needed for the transition to electric cars, exchange rate headwinds and rising raw materials prices, it said in a statement.
Meanwhile it must pump more cash into measures to meet strict European carbon dioxide (CO2) emissions limits set to bite from next year.
And a one-off windfall in 2018’s results will create a negative comparison, even though pre-tax profits already fell 8.1 percent last year.
Bosses expect a “slight increase” in sales of BMW and Mini cars, with a slightly fatter operating margin that will nevertheless fall short of their 8.0-percent target.
“We will continue to implement forcefully the necessary measures for growth, continuing performance increases and efficiency,” finance director Nicolas Peter said at the group’s annual press conference.
BMW aims to achieve €12 billion of savings in the coming years through “efficiency improvements” including reducing the complexity of its range.
“Our business model must remain a profitable one in the digital era,” chief executive Harald Krueger said.
This year, most new recruits at the group will be IT specialists, while the total number of employees is set to remain flat at around 135,000 worldwide.
Departures from the sizeable fraction of the workforce born during the post-World War II baby boom and now reaching retirement age “will allow us to adapt the business even more to future topics,” BMW said.
All the firm’s forecasts are based on London and Brussels reaching a deal for an orderly Brexit and the United States foregoing new import taxes on European cars.
“Developments in tariffs” remain “a significant factor of uncertainty” in looking to the future, finance chief Peter said, adding that “the preparations for the UK’s exit from the EU will weigh on 2019’s results as well.”
In annual results released ahead of schedule last Friday, BMW blamed trade headwinds and new EU emissions tests for net profits tumbling 16.9 percent in 2018, to €7.2 billion.