Luxury retailer Chalhoub Group to re-organise as pandemic accelerates e-commerce push

Company to be structured into four verticals of managed companies

Chalhoub Group has joint ventures with prestige names such as Christian Dior. Above, models wear the brand's spring-summer collection.The company's new organisation will be simpler with 4 verticals reporting to group CEO Patrick Chalhoub. AFP
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Dubai-based luxury retailer Chalhoub Group said it is re-organising and appointing two new senior executives as the Covid-19 pandemic accelerates its digital and e-commerce drive.

The company will be structured into four verticals of managed companies: JV and strategy; growth, innovation and investment; operations and enablers; and people and culture, Chalhoub Group said in a statement on Tuesday.

"I am confident that the new organisation will enable us to unleash all the potential and energy of our people," Patrick Chalhoub, chief executive of the Chalhoub Group, said. "This structure will allow us to drive growth and sustainability, be innovative and creative, foster synergies, cooperation and drive efficiency, have more ownership and accountability for our initiatives.”

The global luxury goods market is expected to contract between 20 to 35 per cent in 2020, driven by pandemic-triggered lockdowns and a slump in tourism, according to a May report by consultancy Bain and Company. The pandemic forced LVMH, the world's largest luxury company, to abandon its $16.2 billion buyout of Tiffany. Both companies are now engaged in a legal battle in the US.

The Chalhoub Group represents LVMH in the Middle East in addition to more than 300 brands that include such as Sephora, Tod's, Michael Kors, L’Occitane, Lacoste, Tory Burch.

The company, which has more than 750 retail outlets across the region, said it will further develop and create its own brands, concepts and products and sharpen its focus on the Saudi Arabia market.

The luxury retailer appointed David Vercruysse, a former manager at the company, to lead the new managed companies vertical, which entails beauty and fashion distribution, franchise businesses and the group's own concepts such as Level Shoes. Mr Vercruysse will re-join the company on December 1.

Michael Chalhoub - whose experience spans corporate finance, strategic consulting and launching and developing businesses - will lead strategy, growth, innovation and investment as well as overlook the joint venture businesses.

In June, Mr Chalhoub told The National that the company is cutting costs and preserving cash as it restructures its business to cope with the Covid-19 pandemic that has hit sales. However, it will press on with its e-commerce strategy and expects a full recovery by 2022, its chief executive said at the time.

The company cited its market research that showed about 30 per cent of Gulf consumers bought luxury items from a website for the first time. Customers have "raised the level of expectations on-line and in the stores ... preferences have evolved with more appetite for casualwear, skincare and wellness," the company said.

“I am convinced that the future is full of opportunities for our group," Mr Chalhoub said in the statement.