Middle East visitors to Europe have long-been known for their lavish adventures through department stores such as Harrods in the heart of central London.
But away from the traditional fashion hubs of the British capital, or Paris or Milan, a new trend is emerging – luxury outlet shopping villages.
And people from the Middle East form the fastest growing market for high-end value retail, and register the third-highest average spend per visit, Emirates Business has learned.
Operator Value Retail, which has nine such 'villages' across Europe, said people from the Middle East had accounted for a 169 per cent jump in sales during the first quarter of this year, compared to the same period last year.
"The collection Chic Outlet Shopping Villages in Europe also recorded a rise of three per cent on the average spend by the Middle East visitor compared to the same period in 2008 with an average spend of €312," said Cristina Pecori, spokesman for Value Retail. The total spend by Middle East tourists contributed three per cent of the total sales generated, she added.
The rising number indicates the Gulf was aping a global shift to value-based shopping where considerable price saving is the new mantra.
This emerging trend was confirmed earlier this week when designer Vera Wang, known for her $9,500 wedding gowns, cut the average retail prices for bridal wear by almost a third as shoppers become increasingly cost-conscious in the global recession.
High-end handbag-and-shoes store Coach is selling more handbags for less than $300 and Saks has dispatched managers to Europe to help suppliers come up with lower-priced products for its stores.
The moves are part of an industry-wide push to expand a tier of luxury that uses simpler designs and less costly materials after years of ballooning prices.
Sales of brands that cater to the wealthy may drop 10 per cent this year after holding steady at €170 billion in 2008, according to estimates from luxury adviser Bain and Company in Milan.
"The luxury consumer now wants to understand why the price is what it is," said Michael Fink, a former women's fashion director for Saks. "It's not going to return to the hype and the waiting lists for designer goods."
Between 2005 and 2007, the average wholesale price of luxury goods increased 10 per cent to 15 per cent each year, Fink said.
A shrinking global economy is reversing that trend. While some shoppers will still buy at the highest end of the luxury range, more consumers will balk at cocktail dresses that cost more than $2,000 and shoes above $1,000, he said.
This is exactly where Value Retail's Chic Outlet Shopping Villages are positioned. The group's villages reported a 55 per cent rise in total tax refunded sales generated by all international visitors in Q1.
The more established villages generate average sales densities in excess of €12,000 per square metre on the gross external area, excluding value-added tax (VAT). The underlying reason for its growing popularity is its value proposition of top luxury brands offered at up to 60 per cent discounts, combined with tax free shopping (for non-EU residents) of up to 15 per cent.
"Add to that the lure of a great vacation. We specialise exclusively in the operation of high-end outlet shopping villages serving Europe's gateway cities. Every village is positioned less than an hour away from Europe's most fashionable cities and offer a unique holiday proposition which allows Brazilian, the Middle East, Russian or Chinese visitors to Europe.
"Outlet savings allow you to stretch your travel budget further to include holiday shopping and gifts and since it offers the best outlet collection in Europe it avoids one having to 'trade down' on style or experience," said Pecori. Top luxury stores in the GCC remain more expensive due to a weak euro and pound and marginal discounting within the region.
The sizeable reductions on luxury brands in Europe has caused an exodus of the local shopper, with the UK being the favourite.
Visitors from the Middle East have favoured the shopping destinations of Bicester Village in Oxfordshire, one-hour north of London, La Vallee Village near Paris, and Maasmechelen Village which borders Brussels, Antwerp and Cologne, data showed.
Growing interest from the Middle East and other regions led to the introduction of over 70 top brands since November 2008 at its villages. Of these 30 shops at the group's flagship Bicester Village are in its third phase of expansion. Joining the value offering were Roberto Cavalli, Smythson, Valentino, Jimmy Choo, Trussardi Jeans and Elizabeth Hurley Beach among others.
Visitors to the UK from the UAE are increasing and spending more on average, reported executives with Britain's tourism authority, VisitBritain.
UAE visitor spend in the UK showed 24 per cent growth in 2008 over 2007, with 232,000 UAE-based travellers to the UK spending £289 million. These 2008 figures, though still provisional, represent a significant jump on 2007's figures which accounted for 187,000 UAE visitors spending £189m.
"UAE travellers to the UK have more to see and do than ever before, and now it's even more affordable, so we are not at all surprised to see UAE visitor numbers and related spend continuing to climb," said Carol Maddison, VisitBritain's Marketing Manager for the UAE.
Meanwhile, Dubai retailers are braced for a slow summer but believe the worst may be behind them after the financial crisis sent sales plunging around 30 per cent in the first part of the year.
"Whatever figures we got in the last months are stabilising," said Majid Saif Al Ghurair, Chief Executive of Al Ghurair Group, which operates Burjuman.
"People say summer will be very tough when a lot of people will leave on vacation but after that I think things will pick up again."
Retail sales may have been down 30 per cent in the first quarter of this year compared with last year, said Peter McElwaine, Chief Executive of Jumbo Electronics, which has 30 stores across the UAE.
"The pickup in May was miniscule but there appears to be a slowing down in the slowdown and we appear to have hit bottom," McElwaine said. "The next quarter is going to be pretty flat, but I am also not expecting to see any further decline."
Low-cost, high-end
Each open-air Chic Outlet Shopping Village in Europe is designed to reflect the atmosphere of the area in which it lies. Each hosts between 55 and 120 designer outlet boutiques with the livery and service on expect to find on high-end fashion destinations such as Via Tournabuoni, Fifth Avenue or the Rue du Faubourg Saint-Honoré.
Previous seasons' collections from European and world-leading fashion and homeware brands – in more than 850 boutiques – are available at a reduction of up to 60 per cent the recommended retail price all year round.
They also come equipped with restaurants and cafés, multi-lingual staff, tourist information centres, art exhibitions, personal shoppers and children's play areas.
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