The evolving fashion scene of Dubai
The Dubai fashion scene has evolved over the past decade and it’s only been very recently that brands from outside the region have been tapping into the market.
Brand executives and fashion insiders from Europe and the USA spent many of the early years misunderstanding consumers in the Arabian Gulf and underestimating the diversity of taste from around the wider MENA region. Louise Nichol, editor-in-chief of Harper’s Bazaar Arabia believes that some were “short sighted” when they entered, and that others have been “snobbish” in their approach since.
Now better armed with market intelligence, bigger players in the global fashion scene are making their move with names such as Karl Largerfeld and Vogue Italia’s Franca Sozzani showing support.
Sozzani’s initiative, the Vogue Fashion Dubai Experience, provided a key rallying point when it bowed three years ago. Since then, Dubai has become an important showcase for global product launches and marketing events like Chanel’s cruise show, Swarovski’s couture exhibition and Marc Jacobs’ international launch of his new scent, Decadence.
It’s shows and launches like this and support from these big names that give credibility to Dubai beyond its sheer purchasing power.
There’s still some work to do to take Dubai from being a big retail market to an important player in the fashion industry.
Dubai Fashion Week runs in London to showcase talent from the region to buyers, media and industry insiders. The 2016 show sold out and the organisers are already planning for the show in 2017, which is set to be even bigger.
In March 2016 Arab Fashion Week will run and is set to be as big as London, Paris, New York and Milan. It’s run by the Arab Fashion Council and represents the 22 Arabic countries that are members of the Arab League. While the fashion week will showcase work from designers from the region, it’s also open to international designers and will show just how important Dubai and the rest of the MENA region is to the fashion world.
Billionaire Kumar Birla Champions Regional Supply Chains
As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’.
He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece.
An Era of Global Disruption
Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility.
So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review:
- 2010. China creates export quotas for rare earth elements.
- 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand.
- 2016-present. Trade wars between the U.S. and China hurt suppliers.
- 2020-present. COVID-19 pandemic shuts down international shipping ports.
Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations.
Why Pursue Regionalisation?
Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’.
Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’.
Will Others Follow Suit?
In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference.
Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’.