Gucci and Cartier close stores: luxury brands leave the Middle East
This was reported by Reuters.
In Dubai and other major shopping centres in the Middle East, many luxury brand stores are temporarily closed or operating with a minimum number of employees. Businesses are facing serious difficulties amid the war in Iran, Reuters reports.
The Chalhoub regional group, which operates approximately 900 international brand stores, from Versace and Jimmy Choo to Sephora, said its outlets in Bahrain are currently closed.
In other countries in the region, including the United Arab Emirates, Saudi Arabia and Jordan, stores remain formally open. However, they are operating with limited staff.
As Chalhoub's vice president of communications, Lynn Al Khatib, explained, some employees are only coming to work on a voluntary basis.
"We are working with a small team made up of employees who have voluntarily agreed to come to work and feel comfortable doing so," she said.
Logistics and trading companies have also begun to restrict their activities in the region. In particular, Amazon has closed its logistics centre in Abu Dhabi, suspended deliveries throughout the region and recommended that employees in Saudi Arabia and Jordan remain indoors.
Kering, the owner of the Gucci brand, also announced the temporary closure of its stores. This applies to retail outlets in the United Arab Emirates, Kuwait, Bahrain and Qatar.
The stock market also reacted to the hostilities. Shares in luxury groups LVMH, Hermes and Cartier owner Richemont fell 4-5.7% on 2 March after lunch as investors assessed the possible consequences of the conflict.
Analysts note that the Middle East still accounts for a relatively small share of global spending on luxury goods — approximately 5% to 10%. At the same time, sales of luxury goods in this region have shown rapid growth in recent years.
The conflict is also hitting the tourism industry. If buyers from the Middle East are unable to travel to Paris or Milan, this could negatively affect sales of luxury goods in Europe.
Economists also warn that the war in the Middle East is already affecting global markets. The strikes on Iran have caused energy prices to rise, and a protracted conflict could put additional pressure on the European Union's economy and accelerate inflation again.
