Retail

Chalhoub Group in venture with Italian luxury brand

June 17, 2024, 9:34 AM

Alamy via Reuters

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Luxury distributor Chalhoub Group has entered into a joint venture with Italian fashion conglomerate OTB Group to expand the brand’s footprint in the Gulf.

OTB (which stands for Only The Brave) owns the Diesel, Jil Sander, Maison Margiela, Marni and Viktor&Rolf brands, the Staff International and Brave Kid companies, and holds a stake in the Amiri brand.

OTB and Dubai-based Chalhoub Group said in a statement that they will make “significant investments” to increase OTB’s retail and ecommerce presence in the region for its Jil Sander, Maison Margiela and Marni brands.

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The partnership aims to open at least 15 retail stores over the next five years in the UAE, Qatar, Saudi Arabia and Kuwait and expand its presence in key department and concept stores across the region.

“We want to introduce the beauty of our brands to the Middle East and spread it throughout the region, one of the world’s most interesting markets today,” OTB founder and chairman Renzo Rosso said in the press statement.

Chalhoub Group holds significant influence in the luxury market with a portfolio including 10 owned brands and over 450 international brands.

The Gulf represents a critical growth market for international fashion brands against a backdrop of challenging global economic conditions for the sector.

McKinsey’s latest analysis of fashion forecasts predicts global industry top-line growth of 2 to 4 percent in 2024, with the luxury segment expected to generate the largest share of profit.

Savills’ Global Luxury Retail 2024 Outlook notes that while there are headwinds in the global luxury retail market, the Middle East has been moving up the agenda for expensive brands.

In Dubai – a key driver of store activity in the Middle East – there has been significant growth in luxury spending due to improving tourist inflows and an influx of high-net-worth individuals.

The report said the pandemic also highlighted the potential of “relatively underserved markets with affluent populations”, such as Riyadh and Dubai.

According to Boston Consulting Group, the value of the Middle East luxury goods market, put at €15 billion ($16.5 billion) in 2023, is forecast to double by 2030.