With the inaugural ShopTalk Luxe taking place in the heart of the Middle East, it was only a matter of time before geopolitical issues entered the narrative. Less than five minutes into the opening keynote address, in fact, when Michael Chalhoub, CEO and founder of the Chalhoub Group, shared some experiences of navigating a luxury brand business with 14,000 employees across 14 markets.
“The reality is that so often you don’t anticipate [the geopolitical issues] and some of them escalate fast. In June, when we started receiving phone calls from some of our team members based in Qatar and Bahrain saying that they were seeing missiles above their heads, everything was very scary, very fast.”
Chalhoub recalled working with senior team members to find ways to keep customers and sales consultants safe as the US military struck nuclear facilities in Iran.
“Obviously, we didn’t know that this was going to last, thankfully, only half a night, and that this was probably more calculated than you could have imagined, but it brought with it … fears and complexities. Obviously, your human capital is your priority. And so for us to be able to manage that human capital as well as possible was our real priority,” he recalled in his opening keynote address.
“That night, we got on the phone with the risk committee at 10pm, at 12am, and at 2am just to make sure that everybody was safe and sound. Obviously, seeing it from afar – we were in Dubai – and seeing things that were happening in Bahrain and Qatar, was a nervous moment.”
Chalhoub Group is the largest retail operator in the Middle East with more than 14,000 employees in 14 countries. It boasts more than 750 stores and joint ventures with brands including Louis Vuitton, Dior Couture, Sephora, Fendi, Givenchy and Louboutin. It holds franchises for Saks Fifth Avenue, Loewe, Carolina Herrera, Swarovski, Lacoste, and Michael Kors. But it also runs its own retail concepts.
The realities of unpredictable military activities seem a long way from the Emirates Palace Mandarin Oriental in Abu Dhabi, where ShopTalk Luxe is taking place this week. Some 2000 retail decision-makers from all over the globe are attending.
“We are all being touched by a geopolitical context that is quite difficult to navigate. But that also creates opportunities,” he shared. “For us, it’s about navigating those complexities and continuing to offer an experience at the level our customers are willing to pay for.”
The company is no stranger to uncertainty. Launched in Syria 70 years ago, it later relocated to Lebanon, then Kuwait, before making Dubai home. Each time, the business had to rebuild from scratch.
One lesson from that, he shared, is that “change is the only status quo”. “We know that we are building a fantastic business over time, we can’t take any of this for granted. The reality is that anytime, something can happen.”
Secondly, the company’s durability stems from its people’s durability and strength. “We need to take care of our people as much as possible, because their resilience is what’s going to make us stronger, and resilience is what’s needed today to navigate those complexities.
“This element of being able to go back to square one and relaunch a business is so ingrained in our mentality and our values that we try to instil it into everyone around us.”
Going big when the big are going
Chalhoub’s Level Shoes in Dubai – billed as the world’s largest luxury shoe and accessories destination, stocking more than 350 brands – launched online in the US last year. Michael Chalhoub says that it has gone “super well”, reinforcing the decision to proceed with a 3600sqm store in Bal Harbour, Miami, scheduled to open next year.
He admitted a store of that size is “quite ambitious”, but believes it will create a unique experience, with a stock curation that will be different from that of some large, higher-profile brands.
“We will innovate and tinker with [the format] a little, and then obviously create that sense of community in the same way that we’ve created it in the UAE.”
He disputes that brick-and-mortar retailing is suffering, arguing that failed retailers fell short on delivering experiential value or persevered with formats that were no longer relevant to customers.
Chalhoub’s Level Shoes has figured out the recipe for success, he asserted.
“The experience is seamless, because the curation is good, because the sense of community is there. What we are offering is very different from what other department stores or category killers have been offering in the US, and unfortunately, while they were relevant in the 1980s and the 1990s, perhaps less so today.
“For us, it’s about figuring out the value chain and managing to build that value flawlessly within the different touch points that we have with the customer – whether online or offline.”
Scents and digital sensibilities
Marco Parsiega, CEO of Omani perfumery Amouage, admitted to a controversial view on the role of digital in the consumer journey. “Digital is not the lead for us. Our lead is the experience.”
“What is important is that you are using digital to stimulate the conversation. We do not see digital as an element of the purchase funnel to drive conversion. We go broad with digital. That’s why we educate.”
The key, he shared, is to ensure digital does not replace interaction. “It’s not even complementing it. I think it should further enhance the personal interaction. It needs to be meaningful, and you need to do it with transparency. This is how trust is built.”
The team at Amouage spends a lot of time analysing customer behaviour, looking at metrics such as how long they spend outside the boutique before entering, their path through the store, and how long they spend inside. While you measure all those elements, it is important, he advocates, that technology supports the experience.
In stores, staff work to narrow the selection of some 50 creations to a number more relevant to a customer by choosing an olfactory family, a scent intensity, or a specific ingredient. However, when the company tried to move that process to an iPad using an interactive questioning approach, it did not work. “It lost the excitement. So, yes, we are doing a lot on the digital side, but digital has a supporting role.”
Outside the physical store, product and brand discovery is mainly driven by digital channels. But Parsiega cautioned retailers not to fall into a trap of trying to make everything personal. Amouage likens digital to a window into a large house with much to offer. The brand uses that window to tell stories about its concentrations, production, or ingredients.
Boutiques, he shared, are not meant to be merely points of sale, but rather places where people can experience the brand even more than the products themselves.” He likened boutiques to playgrounds, a place of immersion, of architecture, of structures, of sound and movement. “It’s a multi-sensorial experience.”
Over the past six years, Amouage has shuttered 20 boutiques because it believed they were purely transactional places. New store designs reflect the brand’s ethos while integrating local DNA to build bridges to different cultures. The fitout and messaging are shaped to the local audience.
Amouage may be a heritage brand with a history dating back to 1983, but 80 per cent of its customers today are younger than 45. “What’s fascinating about it is that they are culturally curious. They are well-informed and very confident,” he explained. “They know exactly what they want. They are looking for propositions that are unwavering. They are looking for products that are uncompromising. And they need a good narrative.
“You need to be absolutely focused on what you’re doing in order to stay your course.”
His approach is working. Amouage has quadrupled sales over the past five years by “staying close to the integrity, close to our values, and being ethically very clear in our directives”.
Shop Talk Luxe continues in Abu Dhabi until Thursday.
