The appetite for luxury in the UAE is no secret. From Balenciaga and Chanel to Gucci, Prada or Versace – many big names have set up shop here eager to tap into this demand with high-value products and unparalleled quality.
The region is shaping out to be a promising place for the luxury industry. According to Statista, in 2022, the country’s revenue from the luxury goods market accounted for US$2,695 million.
This figure is only going to go up in the coming years. However, setting up a luxury brand in the UAE is not an easy task. Before you build one, you need to get some clarity on five crucial points. They are:
- What challenges were faced while setting up a luxury brand in the UAE?
- How does Dubai benefit your brand geographically?
- What should your marketing approach be?
- How does the local audience perceive branding in the UAE?
- Is the UAE government supportive of luxury brands?
In this blog post, we will cover all these five topics and also provide you with some tips on how to establish your brand in the UAE market.
Challenges faced while setting up a luxury brand in the UAE
Every country has their sets of challenges and the same goes for the UAE. The process of setting up a business in Dubai can be quite expensive. In addition, there are many regulations that need to be adhered to. Here are three common challenges you might face at some point in your professional journey:
Different Cultural Tenets
The UAE has a rich Islamic culture and you need to keep that in mind. The Islamic traditions play a crucial role in shaping the day-to-day routine of the population in Dubai. Businesses need to take these factors into account before creating any strategies to establish their luxury brand in the country.
The need for a local owner
You can’t start a business in the mainland of UAE without having a local partner. The laws of this country require that you have at least 51% ownership from local players or individuals. This is important for any luxury brand looking to set up shop in the mainlands!
Implementation of VAT
The 5% VAT was introduced by the Gulf Cooperation Council. This particular tax applies to all goods and services except for basic food items, education or healthcare products.
Challenges are a regular part of any entrepreneurial journey. The key is to find a solution and work your way around it. Here’s how Margaret Herde, Managing Director at Embarr Group and a prominent figure in the luxury industry, tackled her challenges while setting up her business.
“I decided to open my company on the mainland and to do all the paperwork by myself to understand. While doing so, I heavily relied on networking. I have always believed in networking and the truth is that sometimes you need to wait for the opportunity with a particular contact. Something that I learned and practiced when it comes to networking – quality not quantity.”
Geographical benefits of setting up a luxury brand in Dubai
It’s important to understand how Dubai can benefit your brand geographically. The Emirate is strategically located at the crossroads of Europe, Asia and Africa. This makes it an ideal place to do business as it gives you access to a large number of potential customers.
The city is also home to a number of world-class infrastructure facilities that can be utilised by businesses. These include the Dubai International Airport, which is the busiest airport in the world, and the Jebel Ali Port, which is the largest man-made harbour in the world.
As far as luxurious brands go, Margaret feels:
“Dubai has a strategic position and attracts buyers from other Middle East countries along with Asia and Africa. Even though Dubai is a relatively young city, it has already gained the trust and admiration of the top luxury brands, due to its unique setup and access to a new wealthy audience.”
Marketing and PR approaches the Dubai luxury industry needs to take
Coming to a crucial point that could make or break your business – marketing. In a place like Dubai, you need to have a solid marketing strategy planned out before you even think about setting up a shop.
You also need to have a good understanding of the consumption pattern of your audience.
The UAE is known to have a somewhat disloyal customer base that seeks value over other things. Also, the population loves to buy from outdoor malls. So, if you’re planning to set up a shop here, then you need to keep these consumer behaviours in mind.
When asked about her take on the marketing approach the luxury industry should opt for in UAE and the concept of malls, Margaret Herde replied:
“The marketing and PR approach is very much dedicated to the GCC region as the customers tend to be “disloyal”. They have different ways of shopping, so the brands need to put more effort into getting their attention.
As for the concept of malls, I think due to the weather malls are the only solution and when we think about it doesn’t feel sophisticated. I must say it’s a challenging part for brands because it affects customers’ experience. However, I am pleased to see more outdoor concepts such as Alserkal all together.”
Understanding how the local audience perceives branding in the UAE
One more key point to remember while setting up your business in the UAE is to have a clear understanding of how the local audience perceives branding.
This is because, in most cases, the purchasing decisions of luxury buyers are influenced by their peers and family members. So, it’s important to ensure that your brand is visible to them and that they perceive it in a positive light.
Recently, personal branding has also become a trending topic in the luxury market space. Several businesses are starting to understand the benefits of personal branding and are investing heavily in it.
To get a better understanding of how the local audience perceives branding, especially personal branding, we asked Margaret Herde to share her experiences:
“Social media all together with digital presence are a big game-changer when it comes to branding. It is at the same time a powerful tool that can lift or damage credibility overnight. There are many elements that are part of the branding and it requests sizable investment.
In today’s world, we pay for brand names and trademarks. Individuals launching in the luxury industry need to look at brand building as a journey, not a destination because it plays an extremely important role when it comes to your personal image, career, business, and even politics.”
Supportive initiatives from the UAE government
The UAE government is pro-business and is supportive of luxurious brands. They understand the importance of these brands in attracting tourists and foreign investment into the country.
The government has also put in place several initiatives to help luxury businesses thrive in the UAE. These include creating a favourable business environment, investing in infrastructure, and providing access to a large pool of consumers.
These initiatives have started to bring in fruit as more luxurious brands choose Dubai to host their fashion show events. Some notable events were the Chanel fashion show and the Armani fashion show.
In our latest episode of The Pulse of Dubai, Margaret shared her thoughts on this topic by saying:
“Dubai has a strategic position and attracts buyers from other Middle East countries along with Asia and Africa. Even though Dubai is a relatively young city, it has already gained the trust and admiration of the top luxury brands, due to its unique set-up and the access to the new wealthy audience and that is why you know at the end of the last year we could see the Chanel fashion show, Armani fashion show. Very unique events so It is definitely a signal that they are on the right track.”
Advice for those who plan to set up or launch a luxury brand in Dubai
Be unique and invest time in understanding the audience, these are the two pieces of advice you need to strictly follow if you want to build a long-lasting luxury brand in the country.
UAE is a unique market with its specificities. You need to clearly understand them before starting any project, as it will help you make the right decisions later on.
Here’s some advice from Margaret to all the budding entrepreneurs who are planning to build a luxury brand in Dubai:
“Do not try to copy existing ideas as the market will verify it quickly. No matter what your idea is, sustainability is a must. It is very important to invest in the team and estimate your budget accurately. It seems to be a good idea to hire a consultant who can guide you through the whole process.
Since we are living in a digital marketing era, this virtual world sometimes creates a misleading image of reality, and it can affect people’s perceptions. Don’t rely on the shortcuts provided by social media as establishing a luxury brand is a long and challenging process.”
If you are really keen on setting up a luxury business in Dubai, then we have a piece of good news for you! Margaret is planning to launch professional courses on luxury branding at Embarr Academy. These courses are carefully curated with industry thought leaders and cover important topics like luxury business management, personal branding, protocol and etiquette, digital marketing, and so on. Check out Embarr’s website to know more.
Branding is important for businesses in the luxury industry, and this is especially true for businesses in Dubai. The UAE government is supportive of businesses that offer luxury products and has put in place several initiatives to help them thrive. To be successful in setting up a successful brand in Dubai, it is important to be unique and to invest time in understanding the local audience.
We hope this blog post has helped give you an understanding of the importance of branding in the luxury industry and how to be successful in setting up a luxury brand in Dubai.
Have any more questions? Write to us at firstname.lastname@example.org and we’d be happy to help!
If you’re looking to launch your luxury business in Dubai, we’ve discussed this topic in length on our latest podcast on The Pulse of Dubai. Now available on Spotify, Google Podcast, Apple Podcast, and Stitcher. Tune in!