Luxury retailer Chalhoub expects 'limited effect' on sales from coronavirus

Region's luxury retail market is set to grow 1%-2% in 2020, Chalhoub Group chief says

Patrick Chalhoub, chief executive of luxury retailer Chalhoub Group. The company launched its first loyalty programme Muse. Pawan Singh / The National.

Dubai-based luxury retailer Chalhoub Group expects a "limited effect" on its UAE sales following a slower influx of Chinese travellers around the world as a result of the coronavirus outbreak, its chief executive said.

UAE companies will 'bounce back' quickly from the impact of the coronavirus outbreak once the virus is contained and air links between the two countries are fully restored, Patrick Chalhoub said.

"The bright side is once this virus is contained, the UAE and Dubai will be much faster to recover and capture back the Chinese customers," Mr Chalhoub told The National. "The most important thing is to contain the virus and this humanitarian disaster: once this focus is achieved, I expect Dubai and UAE to bounce back much faster than any other economy because of their resilience and agility."

Chinese shoppers comprise about three to 10 per cent of Chalhoub Group's sales of its luxury brands in the UAE, which is below the global average, he told reporters on Tuesday.

The UAE's General Civil Aviation Authority on February 3 directed national airlines to suspend all flights to China except the capital city of Beijing as the coronavirus spreads globally, further reducing China's air links to the rest of the world. Prior to that, Emirates and Etihad Airways were among the airlines providing China with crucial air links even as a growing number of global carriers suspended their services to China.

About 3.68 million Chinese passengers travelled through Dubai International Airport last year, a 5 per cent year-on-year increase. Dubai, home to the world’s biggest long-haul carrier, Emirates, has about 90 flights a week to Chinese cities.

The Chalhoub Group, which has a strong presence across shopping malls in the UAE, is undertaking the necessary health and safety precautions for its staff and is in contact with the relevant authorities to assess the situation, Mr Chalhoub said.

The executive said he expects the region's luxury retail market  to record "quite flat" growth of one to two per cent this year.

The Chalhoub Group also said on Tuesday it rolled out its first loyalty programme, an app called Muse, across its retail network in the UAE and Kuwait. It includes 35 luxury brands such as Michael Kors, Swarovski, Level Shoes, Tanagra, L'occitane and others. Members who shop at the Chalhoub Group stores can collect and redeem points for experiences such as a spa day and benefits including tailoring services at home.

The company plans to expand the programme to include Saudi Arabia later this year.

The UAE retail market has endured a tough couple of years as growth has slowed and malls have faced more competition from online platforms.

"The Dubai retail market currently faces challenging times as prominent retailers are either consolidating or limiting their expansion plans while others are increasingly turning to offer discounts and/or promotions to increase customer spending," consultancy JLL said in its annual UAE market review published on Saturday. It said average rents in Dubai's prime malls dropped 14 per cent last year, while vacancy rates grew 20 per cent.