The real potential of Qatar as a luxury destination (Part 1)

Having closely monitored the evolution of Qatar over the past 10 years, we at CPP, believe that the same challenges persist and there is no feasibility justification for further expanding luxury retail in a market with very limited potential. It was clear a decade ago and it is even more clear today, Qatar has never had a vision or an understanding of how it could possibly compete with Dubai to become a luxury destination.

Besides the existing luxury hotels and a few of the upcoming ones, there is no vision beyond the FIFA World Cup 2022 (November 2022) which may even be postponed due to the international context – war in Ukraine as well as the rebound of Covid-19 and the new Monkeypox epidemic.

The top wealthy Qataris have always made their luxury shopping abroad and will continue to do so, despite new openings such as Place Vendome Qatar. The rest of the Qatari’s upper middle class represent a very small percentage which may well justify one luxury mall which is the Villagio which has been around for a long time and it is an established luxury shopping destination. The local expats are hardly luxury consumers.

Before the pandemic, Qatar had never been a tourism destination, but one for major sports competitions such as golf or tennis and one for conferences and events. In 10 years, besides opening a metro and building stadiums, the country has done nothing in terms of shaping up what it is supposed to make up the attractions of the destination. LGBTQ issues, consumption or alcohol and entertainment remain tabu subjects.

The opening of massive store such as Dior, Prada or Louis Vuitton at Place Vendome Qatar is completely unfounded and unfeasible, unless the brands shut down all other locations in Qatar and only maintain this one. The approach taken by brands such as Saint Laurent, Gucci, Versace, Balenciaga, Ferragamo, Bvlgari or Fendi which is to open rather small (medium size) locations at Place Vendome Qatar makes a lot of sense.

They are more of a shopping window for their other stores which are profitable or they could also be an excellent outlet for less pricier products / lines. The ideal size is maximum 100 sqm. Hermes is the best example of why they chose to shut down their store at the Pearl and open a store which is less than 200 sqm with a limited range of their products. Qatar is not a market for 2 Hermes stores!

Expanding retail is not only about the physical opening of a boutique but also understanding the market and how the buying should be done in such a way that it has a real target consumer. Most of the stores which are already open also forgot another critical element – luxury retail is also about service. Service is about training and again about understanding the local consumer. Service at most of the stores visited is beyond mediocre.

Yes, it is ”soft opening” – the excuse used by the developers – but over half of the major luxury brand stores are already open. Walking through the mall on a rather very busy evening when the other malls are buzzing, Place Vendome Qatar felt like a museum. The architecture and the flow are intimidating and cold. There is a WOW factor in the grandeur of the project but there is no desirability and no relevance, which are at the core of luxury.

Over half of the stores which are already open are operated by entities of Dubai (retailers)… the other half being a franchise operated through a local Qatari ”partner” / ”franchisee”. These partners have indeed taken the biggest risk in investing in the physical stores (furnishings, decor elements etc) which usually runs between USD 5.000 and USD 15.000 per square metre. This does not include any stock. Nevertheless, the luxury brands, will find themselves in a similar scenario as Baku (Azerbaijan) where all the luxury stores are operated by entities related to the presidency – bills are paid but there is no business – no real shoppers.

For luxury retail, this is like cancer – opening a retail location which is just a ”facade” or a ”window” which does not have a real operation behind, real sales, real customers. Why would a brand like Loro Piana open such a large store – larger than Bottega Veneta or Hermes? Has the LVMH owned brand done any research to understand the market before planning the opening? What about Prada? Have they conducted feasibilities studies which CPP elaborated 10 years ago? Do they have a business plan? Most probably NO – they just followed each other. Why is there no gigantic CHANEL store planned?

Instead of focusing on fashion, jewellery, watches and beauty, why are there no home collection (furniture) stores? Why not car showrooms? What about concept stores? (Kith, Dover Street Market, Corso Como etc). Why there is no Saks Fifth Avenue or Rinascente? Instead of opening a ”premium” Royal Meridien Hotel (already open) which is directly connected to the mall, why there is not an Armani Hotel? Or there are already plans to open pop-up suites at Meridien? – Etro Suite, Ralph Lauren Suite or Versace Suite?

Why there is a Raffles Doha hotel opening (Q3) without in-synch plans with Place Vendome Qatar similarly to Istanbul where the Raffles Hotel is directly linked to the luxury section of Zorlu Mall? – ironically, a hotel and a mall loved by Qatari travellers. BECAUSE, there is no centralised planning and no centralised vision ! – different owners, different entities – even if Qatari owned, they do not collaborate and there is no discipline in mapping out a solid future vision / perspective.

Most brands do not understand how to take small baby steps first, with a lower stock inventory and test the market. What happens to the other three  shopping ”destinations”? – Villagio, Mall of Qatar and The Pearl Qatar – just shut them down? – while they have been an established destination for years. What happens during and post FIFA World Cup (if it takes place in November)? Are we going to see football fans run around Place Vendome Mall while they drink their beer?

Qatar owns Harrods, Valentino, Balmain, Pal Zileri but there are no plans to open a Harrods department store – only some Harrods ‘Tea House’ or some multi-brand airport style retail. The focus on expanding luxury retail at Doha Hamad International Airport is completely justified and feasible and should be indeed a focus for Qatar. There are transit passengers who can indeed afford luxury shopping up to a certain calibre.

Instead, why Dubai entities run luxury brand stores in Qatar? Or maybe there is a plan to turn Qatar into an outlet shopping destination for unsold luxury goods in Dubai – which would otherwise make a lot of sense. Is marketing going to shift from paying millions to the likes of Naomi and David Beckham to promote Qatar?!?

Part 2 of luxury retail will be published June 1st and will be followed by a similar broad analysis of the luxury hospitality sector in Qatar

Oliver Petcu in Doha

 

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