Prior to 2012, it was a common sight to see wealthy tourists — mainly from the Gulf — and even some Lebanese shopping in Beirut’s luxury brand stores that dot the expansive streets of Downtown Beirut and the high-end sections of Lebanon’s malls.
During the past five years however footfall in many of these international luxury brand stores has been languishing due to the political instability and regional insecurity that have affected Lebanon. The decrease in tourists from the Gulf, as well as the dwindling purchasing power among local Lebanese, has had a large negative impact on these agents.
With Lebanon enjoying more stability now — following the election of President Aoun in late 2016 — it is hoped that the luxury retail market will also pick up. Executive Life spoke to importers of luxury brands to get their perspective on the market in summer 2017 and their expectations for the upcoming few years.
Although no exact figures were provided, the importers of luxury brands that Executive Life spoke to say that tourism has always been a key driver for luxury retail in Lebanon. This is especially true during the summer or winter holidays seasons, according to Ziad Annan, owner of A&S Chronora, the exclusive retailer of Rolex and Tudor watches in Lebanon.
Khalil Noujaim, the chairman of Level 5 Holding, which is the exclusive agent of French luxury brand Eden Park in Lebanon, also believes tourism impacts retail. “There has always been a positive correlation between tourism and businesses in general, and this year is no different. However, the size of the impact differs from one industry to another. For instance, normally tourism affects the hospitality sector most, with retail coming in second place,” he explains.
Simone Tamer, chief commercial officer of Tamer Freres sal, believes that tourists favor shopping in the luxury brand stores owned by the group because of the customer service provided. “Tourists compare our first class service with all the flagship stores they visit around the world. We follow the guidelines and offer a modern Eastern touch to our selling approach, as our culture is known for high standards of service and hospitality,” she explains, but adds that a missed opportunity associated with Beirut as a luxury shopping destination is that Chinese and other Asian tourists are still not interested in visiting Lebanon.
With tourism having such a strong impact on the luxury market, it was no wonder the luxury retail industry in Lebanon generally suffered over the past six years when the number of visitors to the country was low.
Today, tourism is on the rise again in Lebanon, with Beirut’s five star hotels reporting up to 80 percent occupancy, the best it has been in the past six years, although not up to the level of 2010. However, it seems that this has not yet translated into more tourists from the Gulf coming to shop in Lebanon as they used to in the past.
The luxury brands Executive Life spoke to say Lebanese, whether expats or residing in Lebanon, continue to be their main clientele. “Our performance is mainly driven by local Lebanese residents who highly appreciate our designs and their French quality, especially since the brand has been in the market for almost 16 years now. Lebanese expats and Arab tourists started appreciating our brand more a few years back following the international expansion of Eden Park, mainly across the GCC markets,” explains Noujaim.
Annan also says the majority of their clients are Lebanese. “The majority of Rolex enthusiasts in Lebanon are Lebanese living inside and outside the country. Complementing our local faithful clientele, the brand in Lebanon attracts an interest from many enthusiasts living in the region,” he says.
Tamer says expats make it a point to shop in the luxury brands store in Lebanon when available, as opposed to the same brand internationally, as they believe they are helping the economy that way. “Expat visits are increasing, thanks to the airline packages and services provided to them. Our loyal expat clients refuse to buy from abroad, mentioning to us that they want to purchase from the Beirut stores as they believe that they are helping the economy of their country,” she says.
Meanwhile Maher Atamian, managing director at Est. Hagop Atamian (a distributor of luxury and medium-end watches in Lebanon) says their imported luxury watch brands continue to rely on local Lebanese and expats, and have not yet felt an impact from the increase in Gulf tourists to Lebanon. “We are still relying on the Lebanese expats who visit Lebanon during the summer and holiday periods,” he says.
Downtown Beirut has all the makings of a luxury retail area and indeed it was almost overflowing with visitors prior to 2012. “Downtown Beirut is the destination in Lebanon that offers the biggest choice of monobrand luxury boutiques, a wide array of high-end restaurants, and a marina to complete the shopping experience. The presence of five star hotels also helps in the positioning of the city as the luxury retail destination in Lebanon and creates organic traffic to luxury shops based in Downtown,” explains Annan.
In agreement, Tamer says, “Tourists are interested in visiting this area as a luxury shopping destination in Lebanon. All services are easily provided to them, and the access to the city is convenient, valet parking service is available at every corner, streets are equipped with park-meters for those who rent cars, cab services are all over the city, and most of the shops provide them with tax free refund slips upon purchase or free delivery to hotels for heavy or expensive items. Other areas, such as Dbayeh with ABC and Le Mall, also experience tourist footfall, but the only issue is that big brand names are not available in these destinations for high-end luxury clients, so as a brand mix today, Downtown remains the only destination in Lebanon providing the best service for high-end luxury brands.”
But most say the activity in the Downtown area has decreased with the drop in number of tourists, and this has affected the luxury retail sector in the area. “Downtown is the only true luxury destination in Beirut. All major cities have their luxury in their ‘downtown’ areas, and Lebanon is no exception. It’s very important to have it, since tourists target the center of the city when they visit. However, again, Downtown today is suffering because of lack of tourists,” explains Atamian.
Noujaim also speaks of the decreased activity in Downtown Beirut, saying that this is because the area attracts mainly tourists when it comes to shopping, while the Lebanese seek out luxury brands in malls. “Today tourist numbers are not enough alone to sustain a business in Downtown Beirut. This area should be revived to attract more locals and become the main destination for shopping in Lebanon,” says Noujaim.
2017 is not over yet. Summer is still on full blast mode, and the potential profits from the end of year holiday period are still unknown, so a lot might change for luxury retail in Lebanon before the year ends.
In the meantime, luxury brand importers, such as Atamian are asking for continued political stability so things can get back on track and luxury brands can enjoy growth in Lebanon.
Noujaim asks for a reconsideration of rental fees, which would help retailers overcome this tough period. “The main support should be in adjusting the rents in line with the overall economic situation the country and the region is going through. This will benefit both the real estate sector, as well as the retail industry, and will provide a boost until the situation normalizes,” says Noujaim.