Nearly two months of war in the Middle East have hit one of the most important markets for luxury brands in the world, significantly reducing sales in the Persian Gulf countries and forcing companies to look for customers in other regions.
Well-known brands such as Louis Vuitton, Hermès, Dior, Ferragamo and Moncler had invested heavily in the Middle East in recent years, opening new stores and strengthening sales networks in cities such as Dubai, Abu Dhabi and Doha. The region had become an important source of growth for the luxury industry, at a time when sales in Europe and Asia were slowing.
But the escalation of the war that began in February has had immediate consequences. LVMH, the giant that owns Louis Vuitton and many other luxury brands, said demand in the region fell by up to 70 percent in March. Kering, which owns Gucci and Saint Laurent, also reported a drop in revenue in the Middle East.
To limit the damage, some companies have begun moving goods to more stable markets like London and Paris, hoping that wealthy Gulf customers will continue to buy luxury products while traveling outside the region.
The decline in tourism has been another major blow. According to Hermès executives, stores in Europe are also seeing fewer tourists from the Emirates, Kuwait and Bahrain, reducing sales in cities such as Paris, London and Zurich.
However, industry leaders believe the Middle East will remain an important market in the long term, once the war ends and tourism returns. Before the conflict, sales in the region were growing at about 8 percent a year, according to estimates by research firm Bernstein.
