Beauty sales in UAE rise despite slowdown

Cosmetics retailers say UAE sales have continued to grow despite the downturn.

Mohammed al Fahim, the chief executive of Al Fahim Holdings, which owns a chain of cosmetic and fragrance boutiques, says demand for beauty products remains strong.

DUBAI // Beauty and cosmetics retailers say sales have continued to increase despite the economic slowdown, and they are pushing ahead with expansion plans.
So far this year, sales at Paris Gallery have grown by 15 per cent to 18 per cent, said Mohammed al Fahim, the chief executive of Al Fahim Holdings, which owns the chain of cosmetic and fragrance boutiques. "People will be more careful with their disposable income but they will never be stingy with themselves." Beauty, he said, was part of their daily life. Mr al Fahim said sales at Paris Gallery last year grew by 40 per cent.
Al Fahim Holdings is moving ahead with plans to open six boutiques across the GCC this year, including an 8,000 square metre flagship store at Dubai Mall, and stores in Abu Dhabi and Al Ain, he said. It is also pushing ahead with Luxury Land, a more than 32-hectare development with retail, hospitality and beauty services in Dubailand, but its timetable hinges on the schedule of the developer, Tatweer, and the other theme parks, Mr al Fahim said.
The Middle East beauty market is forecast to grow to more than Dh11 billion (US$2.99bn) this year and the UAE will account for Dh3.3bn of that, according to Andrea Werner, the senior show manager of Beautyworld Middle East, an industry exhibition in Dubai. This is up from Dh8.6bn across the region last year, Ms Werner said, but the full effect of the economic slowdown had yet to be revealed. "We are sure the trend will still continue to point upward, though the estimation is likely to reduce," she said. "This is because, as the US and Europe are even worse hit, at these dire times companies are looking to explore new markets. The Middle East holds its attraction even now in that view."
Ms Werner said growth would be driven by the under-25 market - almost 60 per cent of the GCC population - and by the surge last year in beauty retail space and spas in Dubai. She said GCC nationals, who formed the core clientele in the area, would still buy the top brands.
Mr al Fahim said cosmetics and perfume were important for this segment, which represents 70 per cent to 75 per cent of Paris Gallery's customer base. "When we talk about Arab consumer and GCC countries, beauty was always important," he said. "It's part of the culture."
But Ms Werner said expatriates were likely to move from superluxury brands to lower-priced ones. Osama Rinno, the president of Clarins Group Middle East, said his company had already seen customers move to more affordable items. "Consumers might be shifting from one brand to the other, and might be going to more affordable brands, but I do not see them stop buying," Mr Rinno said. "The brands that will be suffering will be the brands that were selling skincare and make-up at astronomically high prices."
Mr Rinno said he expected a small fall in revenues this year with the drop in tourist numbers, but not a collapse. "Although the number of customers has decreased, the sales have not decreased as much," he said.
Mr Rinno said he was optimistic the market would return to normal next year, but he did not expect the same double-digit growth the industry had enjoyed in past years. The UAE market would grow between 5 per cent and 8 per cent a year in the near future, he said.
But Robert Taylor-Hughes, the managing director and chief executive for the Middle East and West Asia with the Beiersdorf Group, said sales of its Nivea brand had already recorded "double-digit growth" this year, ahead of last year. Beiersdorf had not cancelled any of its major plans for this year, he said. "I think the next 12 months will be the testing time in terms of market growth," Mr Taylor-Hughes said. "If the situation changes, which everyone would expect it to, by 2010, I think we'd see a higher level of market growth."
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