Patrick Chalhoub, Joint CEO of the Chalhoub Group
FROM a business standpoint, one of the interesting things about the luxury market is the way in which it appeals in similar yet different ways to people across the world. In the Middle East, for instance, as in Europe, consumers are increasingly more concerned about a luxury brand’s provenance and quality of craftsmanship than simple brand status. The epithet “luxury” signifies a hard-to-define combination of aesthetic beauty, cultural depth, exclusivity and unattainability.
Few companies possess a better understanding and positioning within the luxury market in the Middle East than the Chalhoub Group, which has been working closely with luxury brands in the Middle East for over 60 years. To find out more, we recently had the unique opportunity to sit down with Patrick Chalhoub, joint CEO of the Chalhoub Group.
The Chalhoub Group, has been working with luxury companies since the 1950s and indeed is one of the oldest companies of its type in the world. What inspired the Chalhoubs to start the company?
The story started 60 years ago back in Damascus, Syria, when my parents established the first Christofle boutique. The inspiration and essence is linked to the cultural and personal bond they shared with their circle of friends for the French beauty, elegance and savoir-faire mixed with a feeling of luxury and what it means along with their Middle East familiarity. The idea was to bring this appreciation to this part of the world serving as a bridge between the East and the West. They have created the Group when 60 years ago luxury and the Middle East did not mean much, and having the feeling that both luxury and the Middle East could become big.
Your company partners with luxury companies in a variety of ways. In a sentence, how do you define what you do? What value-added do you offer that sets you apart from competitors?
On the one hand we have a robust understanding of the Middle-Eastern customer, their aspirations, dreams, trends, and their evolution. From the other hand, we grasp the different sectors such as beauty, fashion and gifts as well as the brands, their ambitions, brand equity, etc. What we do is bridging these sides together in the best possible way, either B2B, direct to consumer, distribution network or through retail. Then we amplify this synergy by adding a twist and generating an innovative, creative outcome that pleases the consumer.
In terms of our added value that differentiates us from competitors it is certainly our presence and understanding of each and every market of the Middle East, locally and regionally. Then we distinguish ourselves through our human resources – our people – who are passionate, deeply knowledgeable, engaged and understanding of the brands. We also possess a solid infrastructure that supports the regional presence; with flexibility and adaptability to the market conditions and demands.
How do you determine with which brands to work? Do they approach you or vice versa?
Choosing a new brand is a complete alchemy. Initially, our teams travel all over the world to see what is happening and to see if we can get it into our market. So, as market leaders we always try to stay ahead of the curve. Then, also due to our position, we are often contacted by the brands and we filter as to what is the most appropriate brand for us to work with. The most important aspect is, of course, that a brand has to offer us something and it’s not looking at only the sales-driven experience. This is not that what interests us and drives us. What drives us is to see if there is anything within the brand different or more adapted to this part of the world, and can we add value to develop it.
On the other hand, in order to better address the Middle East luxury market, the new brands need to better know the different markets and their consumers. The Middle East countries are a market of a great opportunity for luxury, a dynamic, fast growing market with different stages of maturity. The customer base is wide and diverse, increasingly knowledgeable, rapidly evolving, extremely demanding, and with diverse behavior, expectations, and aspirations. Such customers are looking for a unique shopping experience with a maturity level from city to city. It is a market which requires know-how, expertise, and knowledge of constantly changing dynamics.
What are the biggest challenges luxury brands face these days? What about high street retailers like Sephora, with whom you also have done work?
The GCC luxury consumers are following their own journey rooted in their particular lifestyle and societal codes. They are passionate about luxury yet demanding and assertive. They will expect from brands to deliver a hyper-experience in a self-contained world, which will turn a trip to the store into a journey in itself. Sales people will need to become story-tellers of their enchanted journeys.
The customer is becoming increasingly knowledgeable, demanding and volatile. Thus, we have to offer a real experience, real knowledge and real storytelling. The customer is also less loyal due to having many options of interacting, traveling and variety of choices in the market.
The store is expected to become an extension of the home with large spaces including private areas, comfortable seating and the legendary Arabic hospitality. It needs to be digitally enhanced, enabling easy screening of the whole boutique, pre-booking, e-commerce and virtual trials simultaneously shared online.
Customers want to be recognised when stepping into the boutique, their tastes and needs anticipated. Omni-channel will be a must with seamless integration of the in-store experience with the online experience and social media platforms. Products will have to be launched in the Gulf at the same time as in the West – to the minute including special lines for Gulf customers in terms of sizes, cuts, shades and scents and these will be launched exclusively in the Gulf or ahead of the global market.
Retailers will need to nurture their relationships with their customers by celebrating the bond by building on the power of family and friends and becoming part of their customers’ legacy. In order to be able to accompany luxury Gulf consumers and anticipate their aspirations, luxury brands will have to face these challenges by tapping into the societal fabric, which sets the path for a very specific consumption journey.
The other aspect is that we have to be extremely consistent in the way we present the overall story of the product, pricing, service, etc. The client is increasingly exposed and thus we address this by maintaining a coherent and consistent high-quality level of experience. Other challenges include human resources and finding the right, talented people, and subsequently training and developing them.
Lastly, we would add the soaring costs of operating and remaining competitive. In terms of high-street retailers, when there is a winning formula it is often copied and imitated; we have to always remain quite innovative, creative, bring new ideas, concepts, products and exclusive products. Thus we seek to always challenge ourselves and continue innovating.
Your company has done extensive work in the beauty industry, even creating your own brand, Wojooh. Why did the Chalhoub Group decide to move into the retail e-commerce space?
We created a network of perfumeries specialised in beauty and very much adapted and close to our local customers, answering what our customer wanted. In this distribution network we wanted to include the institutional brands and at the same time a niche offering. Again, this is a chain very close to the community which portrays passion and expertise.
When in 1998 we opened the first Wojooh, there were some existing stores selling perfume, gifts and accessories; however, this was the first store selling exclusively beauty in the Middle East.
With regards to eCommerce, we believe that today there are no separation anymore between the online and offline experience; there is no online promotion and offline promotion; online and offline retailing. The same customer is simultaneously online and offline in order to view the product and become knowledgeable. Therefore, it is important for us to follow the customer any place, anywhere and in various modalities of mass communication.
Your company changed the name of this brand from “Faces” to its Arabic equivalent “Wojooh” earlier in 2014. Why the change?
Faces always had both names Wojooh (Faces in Arabic) and Faces which was quite confusing for the customer because some of them, those who were mainly English-speaking used the Faces name whereas those of Arabic background referred to Wojooh. Therefore, it was often difficult to have two names and this is why it was more coherent to have one name.
The second reason is that the name Faces, proprietary for our Group in retail and beauty distribution in the Middle East, was not usable in opening Faces outside of the GCC countries due to the fact that there are other Faces brands in Stockholm, Canada and India. Thus we decided to keep one name which is Wojooh, which is exclusive and can be registered worldwide and which can be applied for products and shops, and which is a network very much adapted to our Middle-Eastern customer who are the core of our business.
Your website includes the statement: “A passion for building brands is our very essence.” What elements, in your opinion, do brands need to succeed, define, and distinguish themselves apart in today’s competitive market?
Many brands are doing very well in the region, either because of being internationally recognized or desired, the index of desirability is becoming much more important than the one of awareness for luxury brands.
But what makes brands sustainably successful is their ability to have a deep understanding of the market, of the customer, and a certain adaptation without losing their identity.
Essentially, the brands show a strong commitment to the market rather than chasing quick returns and superficial experience. They have the ability of creating an emotional link with the local clients who could have complex behavior and sometimes contradictory aspiration; such as tradition and at the same time modernity, recognizable brands and product and at the same time uniqueness, family and friend influence and at the same time their own path of discovery.
Luxury consumers in the Middle East are well known for their discerning, high-end tastes. What do luxury consumers in the Middle East look for from brands?
Luxury customers have shifted from looking for a good deal to looking for choice to a unique service and experience. Customers are now not only looking to access a brand and a luxury product, but increasingly expecting the expertise and the whole experience. They are evolving to become even more assertive and researching more bespoke, niche offerings.
All focus groups conducted by our Business Intelligence team around the subject of service and shopping experience point to an overwhelming desire for comfortable, practical, fast and effortless experiences. It is this very desire that we see fuelling the growth of the digital whether online shopping or digitally enhanced in-store experience. Coupled with the quest for novelty, latest releases and the ‘having it before anyone else’, digital appeal should grow among affluent nationals. Its only limitation is trust – trust in the product quality, trust in the payment, trust in the operator.
How important is digital media to your business strategy, particularly in working with clients? What about social media?
Social Medias play an important role in the region where the engagement is very high, with 89% of national internet users saying that they regularly access Facebook and YouTube [Chalhoub Group, GCC Digital, 2012]. The high social media penetration rates are driven in large part by cultural taboos: Facebook offers a means to bypass restrictions about socializing in person; YouTube’s particularly strong presence among the region’s youth is fuelled by the need to partake in open lifestyles and communities, albeit from afar, which often stand in stark contrast to their familiar immediate surroundings; Twitter provides a virtual outlet for opinions in a politically-sensitive region.
With regards to the brands digital strategies, we believe that both the online and offline are equally important. The consumer is extremely knowledgeable and spends a lot of time on the internet to get all the information needed on the product before going to the store to buy it. He goes online and especially on social media to get all the information related to the brand and its products. To make the best use of the social media, the brands should be present on the channels that the consumer uses; they should inform the consumer about latest news and engage with him through these platforms.
Today, the customers are not only listening to the brand, but also to each other through social Media, and through what opinion leaders (bloggers, etc) have to say as well.
by Jessica Quillin