Luxury brands prefer to open their own stores

A report from Savills Middle East looked at new store activity in major national markets like the United Arab Emirates.

Luxury brands prefer to open their own stores in the Middle East rather than franchises, according to a report on the commercial real estate sector by Savills. In 2021, Savills saw a very marked increase in the dominance of ultra-luxury, with these brands accounting for 92% of new store openings in the region.

While Dubai has historically been the center of new store openings, Savills has seen increased activity in Saudi Arabia. The commercial real estate expert has also found a new trend among international luxury brands.

Retail Advisory at Savills Middle East, Kenny Lam, explained: “In Dubai, many luxury brands are represented by single-brand stores through local franchises and partners, but with the recent change in government policy, we are seeing international brands come indirectly to seek to regain full control of their stores.

The trend of new store openings in the region is expected to remain in focus as brands continue to explore the opportunity to open their own stores.

The top three luxury houses, LVMH, Kering and Richemont, continued to increase their share of new openings. Together, they accounted for 41% of all new openings globally in 2021, up from their 33% share in 2019.

“The three players that dominate the share of store openings last year come as no surprise given their brand acquisitions before the pandemic. Given that they have ramped up their M&A and financing activities during of the past 12 to 18 months, that certainly suggests their dominance is likely to increase,” Savills added.

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