War in the Middle East: Dubai, a luxury capital on borrowed time
Dubai – Louis Vuitton, Dior, Louboutin... In Dubai's Mall of the Emirates, one luxury boutique follows another. A month into the regional war, their teams of unoccupied salespeople watch for customers or scroll through their phones out of boredom.
Having just left Chanel, a rare customer who wishes to remain anonymous is adamant that people “should not come” to Dubai right now. “It’s dangerous, there’s a war. It’s different for me, I’m from here. If I die, I die with my family,” she explains. She is dressed in a black robe and niqab, with an orange bag from the Hermès boutique opposite on her arm.
The impeccably dressed salespeople say they have been instructed not to speak. One of them, however, briefly describes the general atmosphere. “Of course there are fewer customers, but this is felt most among tourists; locals continue to visit. Fortunately, we have a large local clientele, so no one is panicking”.
Dubai's patiently cultivated image as a safe haven for wealthy expatriates and a temple of luxury shopping took a blow. This happened when Iranian missiles and drones struck its landmarks at the beginning of the conflict, which was triggered by the Israeli-American offensive against Iran.
Tourists fled, and the luxury industry turned to positive thinking. An industry insider, speaking on condition of anonymity, explained that “the prevailing feeling”, after the initial “shock”, “is that the situation is temporary and will resolve quickly”.
"Fashion avenue"
The market share of the Middle East, one of the few growing regions, is significant. It accounts for between 6 and 8 percent of brands' global turnover, according to analysts at Bernstein.
They estimate that luxury sales in the region for March will be halved. This is mainly due to the drop in tourism, both for visitors and those in transit, with major hubs like the airports in Dubai, Doha and Abu Dhabi either closed or operating at reduced capacity these days.
More than half of the region's luxury boutiques are located in Saudi Arabia and the Emirates. The most profitable and highest-selling of these are gathered in the Dubai Mall, another of the city's imposing shopping centres.
With its waterfalls, giant aquarium, 1,200 stores and over 110 million annual visitors, this behemoth of bling boasts of being the most visited place on the planet.
There are no guided tourist groups on this late March Saturday evening, but the regulars are here. Customers seem more eager to enter the newly opened low-cost retailer Primark than the spectacular and glittering “Fashion avenue”, which houses the giant luxury boutiques.
Like Covid
To avoid “creating unnecessary concern” or harming the “reputation” of the Emirates, property developer Emaar has forbidden retailers from closing or reducing their opening hours. The industry insider interviewed by AFP claims that luxury brands requesting this were threatened with lease termination.
Their footfall has “collapsed”, according to Bernstein analysts, and several brands have reassigned their salespeople to online clienteling. They say the strategy has proven particularly effective in a region full of wealthy clients “with nothing else to do but shop”, much like “during Covid”.
Hoping for a swift end to the conflict, the industry is also counting on a “revenge spending” phenomenon from “relieved” customers. The industry insider analyses that “the key is the return of tourists”.
According to the insider, the worst-case scenario is a prolonged conflict with sporadic attacks on the Gulf, which would risk permanently affecting Dubai's appeal.
At the Mall of the Emirates, nestled between luxury retailers, the famous and imposing artificial ski slope is just as deserted. Faces buried in their parkas to withstand the sub-zero temperatures, employees wait around while the ski lift runs almost empty. They are all waiting for the tourists to return.
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