Dubai luxury retailers see slowdown as Iran war disrupts tourism

DUBAI: High-end retailers in Dubai are facing weaker business as the conflict involving Iran continues to affect tourism and travel across the region.

At an upscale mall in Dubai, luxury boutiques remain open, but sales staff are spending long stretches waiting for customers. According to AFP, employees at several stores said they had been instructed not to speak to reporters. One salesperson briefly described the situation, saying, “Of course, there are fewer customers, especially tourists,” and added, “Locals still come. “Luckily, we have a strong local clientele and no one is panicking.”

Dubai, which has long promoted itself as a secure and stable destination, has been affected since the start of the US-Israeli offensive against Iran on February 28. The city has repeatedly come under retaliatory drone and missile attacks from Tehran, prompting tourists to leave.

One industry figure, who asked not to be identified, said there was a broad expectation that “the situation is temporary and will improve soon”.

Some shoppers, however, voiced sharper concern. A customer leaving Chanel said, “People shouldn’t come (to Dubai) right now.” She added, “It’s dangerous, it’s war. For me it’s different. I’m from here — if I die, I die with my family,” while dressed in a black abaya and niqab and carrying an orange Hermes bag.

Luxury market impact

Analysts at Bernstein said the Middle East is among the few regions where luxury sales have continued to grow, accounting for between six and eight percent of global revenues for leading brands. But they estimated that luxury sales in the region would drop by half in March, largely because of a sharp decline in tourism.

The analysts said the downturn was linked not only to reduced travel to Gulf destinations, but also to lower transit traffic as major aviation hubs including Dubai, Doha and Abu Dhabi were either shut or operating with reduced capacity.

More than half of the region’s luxury outlets are located in Saudi Arabia and the United Arab Emirates. Among the most profitable are those concentrated in Dubai Mall, the sprawling retail complex beneath Burj Khalifa, the world’s tallest tower.

Dubai Mall, known for features including indoor waterfalls, a giant aquarium and a yearly footfall of more than 110 million visitors, says it is the most visited place in the world. Yet on a late March evening, its broad air-conditioned walkways were missing tour groups. Regular local shoppers were still present, but queues were more visible at Primark, a newly opened budget retailer, than in the mall’s luxury-focused Fashion Avenue lined with premium international brands.