cover story: The Business of Fashion

of Fashion

Business

The

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Qatar is ranked 11th in the first annual Retail International Programme Expansion (RIPE) Index, proving favourable for global retailers looking to expand internationally, particularly in the luxury segment. In this scenario, when retailers are making a beeline for Qatari shores, why do local shoppers tend to fly out of Qatar to fulfill their needs? Where do the retailers fail to keep the shoppers satiated? Or does the fault lie with the shoppers who do not drive the need?
Debrina Aliyah reports.

cover story: The Business of Fashion

ccording to Euromonitor Internationals market research, the global apparel market was valued at QR6.1 trillion ($1.7 trillion) in 2012 with a predicted growth of 5.8% this year. Marketline Research says that in 2014 the global childrenswear market is expected to reach beyond QR677 billion ($186 billion), marking a 15% increase in five years; the global bridalwear market is expected to start moving towards the QR207 billion ($57 billion) mark; the global menswear industry should exceed QR1.4 trillion ($402 billion) and the biggest segment in the industry, womenswear market is expected to pass QR2.2 trillion ($621 billion).

QR trillion Global womenswear market in 2014

2.2

About 80% of the world's population would say they care about fashion. Fashion, it would seem, is reserved for the wellheeled, celebrities, and the affluent segment of the society. Then what is it that is fuelling this insatiable demand for collection after collection systematically produced to the strictest of deadlines and calendars for fashion weeks? The process is one that is so excruciating that many fashion designers have been pushed to the brink; some give up while others are driven to suicide and break down (as in the case of Alexander McQueen and John Galliano). As a seasoned fashion star Alice Temperley tells, You must be prepared to give away certain years of your life to make it. What most people do not see is that it is the trickling down effect that quietly pushes the engine in the background. Looks and styles presented at fashion weeks find their way through layers of interpretation and production through all channels of garment

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Another Qatari brand is created

Qatar Luxury Group (QLG), owned by Qatar Foundation, was created to build and foster luxury brands in the fashion, hospitality and lifestyle sectors for an international audience.

fter the purchase of the luxury handbag maker Le Tanneur & Cie, QLG is now extending another arm into fashion with the launch of the much anticipated QELA this month. A fashion label conceptualised and produced in Qatar, QELA is the states first global fashion brand and draws its inspiration from the Qatari heritage, which is reflected in the aesthetics of its collections. The brand will offer a collection of leather goods, shoes, jewellery and a couture line that are designed in the QELA workshops. In an exclusive interview with Qatar Today, CEO Gregory Couillard talks about the vision of the company and how fashion forms an important part of the business. Couillard believes that fashion is one of the key markets that needs to be tapped. Fashion is a global business and the industry as whole generates over $1 trillion annually, employing millions of people. At QLG we are creating jobs in Qatar and abroad, and are investing in the training of new recruits. We see ourselves at the heart of the fashion and luxury eco-system that is growing in the country, he says.

Behind the founding of QLG Qatar Luxury Group was created to build and foster luxury brands for an international audience in the fashion, hospitality and lifestyle sectors, and was established in 2010. Our fashion division is built on the belief that there is an opportunity in the global luxury market for a Qatari group that is true to its heritage, open to the world, and creates timeless products using the best materials and highest level of craftsmanship. Through our hospitality division, we are also active in the world of high end restaurants, and together with chef Guy Savoy, Quisine by Guy Savoy was opened on The Pearl in November 2012. In addition, La Varenne, a French Brasserie and The Anvil Rooms, a traditional steakhouse, were opened in Tornado Tower. The common strand between all our initiatives is that they are centered on excellence, quality and creativity. Tell us more about your fashion and luxury division. Our fashion division is composed of our own, made-in-Qatar fashion brand and Le Tanneur, which is one of the oldest leather goods brands in France that QLG acquired in 2011. Our own fashion brand, QELA, will be
Continued on Pg43

Fashion is a global business and the industry as whole generates over $1 trillion annually, employing millions of people. At QLG we are creating jobs in Qatar and abroad, and are investing in the training of new recruits."
Gregory Couillard, CEO

cover story: The Business of Fashion

making. And this is where the real money is. This ingrained necessity has churned out an industry so profitable that the three richest men in France (the beating heart of all things fashion) minted their billions in the fashion and beauty industry. The 2012 Forbes Rich List puts chairman of LVMH, Bernard Arnault as the wealthiest person in France with a net worth of QR149 billion ($41 billion), followed by Liliane Bettencourt of LOreal at QR87 billion ($24 billion) and Francois Pinault and family of Kering (formerly PPR) at QR47 billion ($13 billion). In Italy, another stalwart capital of fashion, Giorgio Armani, is the fifth richest man in the country with a net worth of QR18 billion($5 billion). These figures are astounding, considering the industry is one that is often as-

sumed to be recession sensitive. But while consumers may purchase less during a downturn, they would be looking to purchase items of better quality to last a longer period and this often translates into items of higher prices. The Brand Finances 2012 Global 500 study of the worlds top brands suggests that in times of economic slowdown, consumers embrace luxury and indulgent brands instead of traditional household favourites. The report shows that the global downturn has created the Alphabrands, brands that consumers turn to for quality regardless of economic conditions. Some of the worlds top fashion houses, categorised as Alphabrands, including Louis Vuitton, Hermes and Ralph Lauren continue to report soaring profits. Middle East and Qatar market While the global economy is fluctuating, newly minted millionaires from new economies are splurging enough to make up for the losses in other countries. In the Middle East, regional retail spending accounted for 30% of global sales last year according to a report released by consulting firm Bain & Company. A 2012 report by Deloitte confirmed that consumers in this region spent some QR29 billion ($8

QR trillion Global menswear market in 2014

1.4

Consumers in Qatar spend up to QR18,200 ($5,000) a month on various luxury items but fashion topped the list of preferred purchases in 2012, with 37% of respondents saying they enjoy shopping for fashionrelated items.

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Continued from Pg41

billion) on luxury goods and top fashion retailers experienced a 42% growth increase in the MENA region. If we are not talking about volume, then we are definitely talking about value as one third of global haute couture client comes from this region. Qatar ranked 11th in the first annual Retail International Programme Expansion (RIPE) Index, proving favourable for global retailers looking to expand internationally, particularly in the luxury segment. Qataris are the biggest buyers of luxury goods in the Middle East region, closely followed by consumers in Bahrain, according to the American Express Middle East Luxury Spending Tracker. Consumers in Qatar spend up to QR18,200 ($5,000) a month on various luxury items but fashion topped the list of preferred purchases in 2012, with 37% of respondents saying they enjoy shopping for fashion-related items. Qatars stake in retail With strong consumer confidence and spending, does it really come as a surprise that Qatar would want a piece of the cake? One of the most prolific fashion house takeovers of 2012 was Valentino's acquisition by Mayhoola for Investments, a private Qatari-backed investment vehicle. Through the deal, Mayhoola also acquired the M Missoni license business, another profitable fashion label that is known for its signature knit print. Stefano Sassi, President and CEO of Valentino, commented: We are delighted with this development. During the past few years, despite swings in the luxury markets, the company has operated with

launched this month. It has been inspired by Qatar, its home country, and created for an international, refined audience. The launch of the brand will be made at our boutique on the Pearl, which will be followed by the opening of boutiques in the leading fashion capitals of the world. We have been working very hard creating this brand. You will find that it is marked by excellence and openness, and will draw from time honoured traditions. Our products are created by passionate and talented craftsmen, committed to passing down and perpetuating their unique know-how. We are very proud of our multicultural teams, and fostered an open exchange between the local Qatari cultures and those from abroad. This openness, reflected in the brand that we are launching, is very exciting. How do you feel the business of the fashion industry is doing in Qatar? All of the elements required for the business of fashion to thrive are here, and this is an exciting time for the industry. There is lots of creativity, the emergence of designers, growing number of industry players, good retail space and a savvy and high-end market. It is often pointed out that Qatar is a significant consumer of fashion and luxury goods and services. Qataris have a sophisticated sense of fashion, and are knowledgeable about industry trends. I think, however, the most interesting aspect of the industry here is the creativity and passion of young designers. Qatar is at the crossroads of the East and West and hence is a melting pot of cultures and nationalities. This provides QLG with a very unique opportunity that can be leveraged in several ways; by recruiting the best talents in the world to our studio

and workshops and exploiting our knowledge of the region and emerging markets in Asia. What do you think must be done to support the growth of the retail fashion industry in Qatar? I believe that there are ample retail spaces in Qatar, ranging from the high street to the high-end. Retail is always driven by the market, and in that sense I dont see there being a case for specific support or intervention. Can you tell us a little bit more about Le Tanneur? We acquired a majority stake in Le Tanneur in 2011, one of the oldest leather goods company in France. The acquisition allowed us to share creativity and know-how and gives our new brand access to one of and most respected leather goods workshop and most talented artisans in the world. This ensures that leather pieces from our fashion brand will be of the very highest standards in the world. Tell us about QLG's Unique Selling Point We expect our fashion to have a big impact, as it is rooted in art, culture and heritage. In this sense, for QLG, the industry goes further than just business. We are passionate about our role in preserving traditional fashion craftsmanship - Metiers-dArt as we say in French - which takes so many years to build and is an increasingly rare commodity in the fashion industry today. This craftsmanship consists of skills and know-how that are passed from generation to generation and take decades to master. This is why at QLG we have a long term approach to our business philosophy and place art and culture at the centre of everything we do

cover story: The Business of Fashion

great intensity and remained focused on maximising the potential of the Valentino brand. This effort should drive a 60% increase in revenues from 2009 to 2012. Our new shareholder will help us reach our full potential. More than just a glamourous acquisition or trophy asset, as many critics may term it as, it actually makes perfect sense as Valentino is one of the very few private couture houses left, and a significant proportion of its clientele are now from the Middle East. As for Qatar Holding (QH), the investment vehicle for the states Qatar Investment Authority, their 2010 purchase of Harrods has proved to be a strategic and smart investment with the luxury department store chalking record profits despite economic woes. QH picked up a dividend of QR547 million ($150 million) after the very first year of the acquisition. Continuing the fashion retail conquest, QH has also amassed a small stake of slightly more than 1% in LVMH and 11% in luxury jeweller Tiffany. The jeweller will be opening its new flagship store in Paris at 52,

Qr billion global childrenswear market in 2014

677

Champs Elysee in 2014, a building acquired by QH earlier last year. Through Qatar Luxury Group, the state has also bought a controlling stake in French handbag maker Le Tanneur & Cie. Other than just buying into luxury fashion brands, QH is set to launch several projects that will position fashion retail as its main offering. Qatars Deluxe Village is a retail project in the pipeline planned in the Italian summer resort town of Porto Cervo on Costa Smeralda. QH had acquired several properties including hotels in the Italian island in 2012. Commenting on the transaction, Ahmad Mohamed Al-Sayed, Managing Director and Chief Executive Officer of Qatar Holding, said: We are happy to have agreed terms for the acquisition of this established portfolio of luxury assets in Sardinia. We intend to continue supporting the on-going development programme which will see Costa Smeralda strengthen its position as a top luxury resort destination. The Deluxe Village will include a popup Harrods store and boutiques of major international luxury brands. The state has also agreed to invest in a joint venture, IQ Made In Italy Venture, with Italian companies that will focus on the sector including fashion and luxury goods. And while these are the deals that have been disclosed, Qatars key investment players, whether state-funded or privately operated, still maintain a relatively low profile and are believed to have stakes in other major fashion houses including British accessories label Anya Hindmarch.

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what Qatar's consumers WANT

he impressive spending figures of Qatar may seem quite misleading, as the numbers represent the total spending by consumers based in Qatar, and need not necessarily translate into expenditure actually made in the country. A quick survey among Qataris and expats reveal that they are more likely to purchase fashion and luxury items when they are travelling, while shopping locally is usually driven more by necessity than by need. Dubai, the bustling tourist destination, is one such Middle Eastern city that is driving up the spending figures luring shoppers from all over the region including Qatar. The one grudge that most local shoppers put forth is about the inventory carried by retailers in Qatar. With the growth of online retailers like Net-A-Porter and Matches Fashion, it is easy for shoppers to keep up with latest releases and compare prices on an international level. And this is where Qatar lags behind; shoppers find that local stores are much more expensive than the price online as well as lack the latest offerings. There is always a delay in stocking new collections. It arrives in Doha a few months too late, and they are often overpriced, usually about 30% more which I am assuming is an indirect tax since this is a tax-free country, says shopper Aisha AlThani. For fashion designer Abdulla Al-Abdulla, shopping in Doha has its pros and cons. Because there are less people shopping locally, chances of you landing the hottest fashion item of the season are higher. However, retailers really have to up their game by not stocking old collections from past seasons which is something that is really rampant here. They also have to pay attention to visual merchandising to attract more shoppers. The window display at the stores here are really unattractive, he says. Consumers also feel that fashion buyers

have to be bold and experiment with different inventory rotations as the current stocking trend in Qatar seems dated and zeroes in too much on market stereotyping. We have a lot more brands in Qatar today than we had five years ago, but I still rather shop abroad because the fashion buyers just dont seem to understand the changing market. They tend to stick to a stereotype which they are familiar with but we are just like the rest of the world, craving for something new and trendy. It is not about catering to one style but about creating new trends! says shopper Fahad Al-Turky. Inventory problems topped off with the lack of knowledgeable sales representatives have driven many shoppers to turn to online shopping, shopping abroad during summer holidays where discounted items are in abundance, as well as shopping in the neighbouring Dubai. They never have enough sizes in stock. I like to get the opinion of sales people when I am shopping and I am always shocked when I know more about their brands than them. I usually do my research online before purchasing and

go directly to that item instead of looking at what is available because I cant be bothered to be harassed by annoying sales people who know nothing about their brand or fashion in general. It would be really good if these shopping malls offer personal shopper services by people who are really good stylists, Al-Turky added. On the other hand, there are a growing number of consumers who feel that shopping more locally can help solve these problems. Interior designer Caroline Chiang, who has lived in Doha for four years, is excited to see new multi-brand boutiques like DNA and The Vanity Room finding foot in the country. The important aspect is in creating demand. When these big brands see local demand increase, they will be more willing to give into the fashion buyers requests for bigger inventory rotation and collections, she says. You need more than one person to buy a Mary Katrantzou dress from The Closet; you need 10 people, and then the brand will respond to give local buyers a better deal.

cover story: The Business of Fashion

Mastercard gives us the scorecard on the shopping spends in the region

The Numbers that Matter

QR

Among Qatari respondents, the average amount they intend to spend on luxury goods in 2013

7,858

of respondents in Qatar intend to spend more on luxury goods in 2013 than they did in the 12 months prior to the survey.

I3

visits discount websites for luxury goods?

yes

89%

no

11%

Shopping Patterns

he affluent spending patterns of the market in Qatar and the Middle East has put this region on the map of the biggest luxury buyers in the world. Through the tracking of luxury spends by Mastercard, several key findings from the tracker confirms the powerful spending habits of the market here in Qatar. The latest MasterCard Index of Consumer Confidence has indicated that Consumer Confidence in Qatar is the highest among the Middle Eastern markets surveyed in the Index, with a score of 96.5. When compared to the previous edition of the index, consumers are more optimistic about regular income (99.3 vs. 98.4), employment (98.1 vs. 97.8) and the stock market (92.0 vs. 91.1). The very positive results in Consumer Confidence scores are a reflection of the booming Qatari market and the Qatari governments ambitious development plans for the future. Consumers who are optimistic in their outlook for regular income and their employment prospects in particular are more likely to purchase non-essential items, therefore stimulating the economy, explained Pankaj Kathuria, Mastercards Area Head for Southern Gulf. The statistics also show that Qatar currently ranks fourth in the expected spend on luxury goods in 2013, with an average spend of QR7856 ($2,158). The UAE leads with QR9723 ($2,671), followed by Oman QR9326 ($2,562) and Saudi Arabia QR8704 ($2,391) ranking third. Qatari consumers are known for shopping in the fashion and luxury capitals of the world like London, Paris and New York. However, they will also naturally make their luxury purchases in the country that they reside in, he said

2I%
Buys on impulse/on the spot

2I%
Considers it and then tends to buy within one month

25%
Extensively researches and buys within twosix months

32%
Decides on the spot, but waits for sale/discount

Ownership
Own currently Intend to own in the next 12 months

Designer clothes & leather goods

36% 30% I2%

jewellery

I3% 25% I4% 4%

Designer accessories & footwear

27%

Luxury Watch

Sources of information for luxury goods

43%
Advertising (TV/Print/Radio/ Outdoor)

39%
Friends and family

I3%
Online shopping sites

I0%
Celebrities/ Public figures

8%
Outlets/brands mailing lists/ catalogues

3%
Online blogs/ forums/reviews