A report by Savills Middle East looked at new store activity in large domestic driven markets like the UAE.
Luxury brands prefer opening their own stores in the Middle East rather than franchises, according to a report into the retail property sector by Savills. In 2021, Savills found that there was a very marked increase in the dominance of ultra-luxury with such brands accounting for 92 per cent of new store openings in the region.
Whereas historically Dubai was the focus for new store openings, Savills found there was increased activity in Saudi Arabia. The commercial property expert also found a new trend among international luxury brands.
Retail Advisory at Savills Middle East, Kenny Lam, explained: “In Dubai, many luxury brands are represented by monobrand stores through local franchises and partners but with the recent change in government policies, we are seeing international brands come indirectly looking to take back full control of their stores.”
The trend of new store openings in the region is expected to remain in focus as brands continue to explore the opportunity for directly owned stores.
The top three luxury houses, LVMH, Kering and Richemont, continued to expand their share of new openings. Together they accounted for 41 percent of all new openings globally in 2021, up on their 2019 share of 33 per cent.
“The three players dominating the share of retail openings last year comes as no surprise considering their brand acquisitions prior to the pandemic. Given that they have accelerated their M&A and funding activity over the last 12-18 months, it certainly suggests that their dominance is likely to increase,” added Savills.
