De Beers at the Mall of the Emirates
April 27, 06Most foreigners know the Mall of the Emirates in Dubai as the desert hotspot that houses an authentic year-round ski slope with actual snow (though the snow here seems to be missing some of the characteristic softness one finds in the Swiss Alps). This week the Mall got a new attraction – De Beers LV opened its retail store at a well-positioned corner in the mall, more or less next to Tiffany & Co., Damas, and Dhamani. We walked into the stylish, somewhat aristocratic, almost formal looking store during its first day of business. While browsing there, Ibrahim Daher, a senior sales associated confided that “except for a small insubstantial sale, no serious items had been sold yet.”
Most of the diamond jewelry displayed in the store was either in white gold or platinum. The one necklace that might have pleased my wife was priced at $1.5 million – I politely passed. “Maybe next time,” I murmured.
Ahmed, my host, predicted that the De Beers Dubai store will quickly become the most successful jewelry outlet in the U.A.E. “Locals will go for the brand, for the name; they couldn’t care about the price tag. Just as in automobiles and many other luxury items, local women want brands. The store will have to replenish its stocks within a few months.”
For such a small population, the number of jewelry stores seems enormous: 850 retail outlets. About 20 percent of these stores are part of a chain; 80 percent are stand-alone retail outlets. However, if one looks separately at the 50 largest retail outlets, then 50 percent are chains and 50 percent stand-alones. But even the larger players are relatively small. There are only six retailers in
But we must be careful when using these figures. There is research that says 67 percent of all retailers are also involved in either manufacturing or wholesaling – or both. There are some stores that are proud to be only selling to consumers – and we assume that De Beers LV is joining that minority. So there may be an overlap when reporting on the number of retailers and jewelry manufacturers.
I wondered who would be the buyers. According to a recent Nielsen survey, 54 percent of all sales are to tourists, 45 percent to
This year alone, there will be eight million tourists visiting
The wholesale market behaves rather differently from the retail sector, and in this column, I am mostly interested in De Beers LV, its competitors, and its place in the market. Some 50 percent of the retail outlets employ fewer than 10 employees, with another 22 percent falling in the 10-20 employee range. Who works at these stores? According to Professor Howard Reed of the Dubai Women’s College, some 99.8 percent of all jewelry market employees are expatriates, while also some 98 percent of the owners are foreigners or foreign residents. These figures sound plausible, given the fact that there are hardly any local nationals living in
The “novelty” of De Beers may well be that it brings such a strong brand to the jewelry market. Most store owners have their own “single” store brand and don’t sell other branded jewelry products. Not surprisingly, 90 percent of the local wholesale market sells unbranded jewelry. Wholesalers also serve clients beyond the local scene. Some 52 percent of all wholesale sales are to local retailers; the rest is being exported to other emirates or beyond.
What is particularly interesting is that both the wholesale and the retail markets are largely cash based: about 50 percent of retail sales and 40 percent of wholesale sales are in cash only. Some wholesalers will also accept checks, though credit cards (at 8-10 percent of all wholesale transactions) seem simply unacceptable. On the retail side, this is even more pronounced with over 50 percent of the sale being paid for in cash and the remaining amount being paid for by credit card. The reluctance to use checks may also have some practical reasons: if one’s check bounces, the inevitable and almost automatic outcome is a jail sentence. The law is merciless in this respect.
Walking through the Mall of the Emirates one cannot escape seeing Damas and various other retailers (often Indian/Dubai partnerships) in which diamond jewelry brands either licensed from, developed by, or supported by the DTC are offered.
It occurred to me that at this mall, under one single roof, DTC supported brands are now competing directly with De Beers. Though, ideally, we like to believe that in branding competition everybody wins, in
Let’s see what De Beers’ entry will do to all the other jewelers at the Mall of the Emirates. The expectation is that De Beers will do well – and if that comes at the expense of retailers supported by DTC Sightholders, who are promoting DTC-supported brands, this Dubai Mall could literally become quite a hot spot – A hot spot worth watching.
Have a nice weekend.