Saudi Arabia: Luxury goods retailer and distributor Chaloub Group is expanding into Saudi Arabia through sales and distribution across the telecommunications sector after striking a deal with channels by stc.

In Riyadh during the second edition of LEAP Tech Conference, the group signed a Letter of Intent with the Saudi firm, one of the largest ICT distribution companies in the Middle East.

The move affirms Chalhoub Group’s desire to expand and strengthen its market position in the Kingdom.

“The transformation taking place in Saudi Arabia is extraordinary and we are incredibly fortunate to be part of this growth story,” Mohammad Aldabbagh, deputy country manager at Chalhoub Group told Arab News. 

“We are committed to nurturing and supporting Saudi talents by highlighting the limitless career opportunities the retail sector has to offer. 

“Our vision is to shape the Saudi luxury fashion, beauty and gifting markets by bringing cutting edge brands and being dedicated to making every customer experience unforgettable.”

The deal will enhance the group’s supply chain, logistics and e-commerce capabilities to address the needs of customers requiring faster and more seamless deliveries.

“Customer centricity is key to our operations in the Kingdom and in the region, and we have a great focus to be as fast as the transformation in Saudi Arabia. Our infrastructure, logistics and last mile operations are a core part of our value chain, and this is what we hope to deliver with this partnership with channels,” Alexandros Komianos, chief fulfillment and logistics officer at Chalhoub Group said in a statement.

Now headquartered in Dubai, Chalhoub Group – the largest retail operator in the Middle East – was founded back in Damascus, Syria in 1955 by Michel and Widad Chalhoub.

Its new business partner, channels by stc, provides services to over 120 cities and has delivered more than 8 million orders to date. It will utilize its fleet agency of over 12,000 Saudi national agents to enable Chalhoub Group to reach and deliver to customers throughout the Kingdom within a four-hour window.

“At channels by stc, we believe that strategic partnerships are vital to our success as we continue to serve our priority; our customers,” Waleed Alkanhal, vice president of last mile delivery sector at channels by stc told Arab News.

The deal also cements the Kingdom as a growing hub for luxury, both regionally and internationally. Saudi Arabia currently accounts for around 40 percent of the group’s retail and beauty goods and 20 percent of its fashion revenue.

As the largest market in the GCC with the largest population, the Kingdom’s luxury good’s market has the potential to grow and eventually account for over 50 percent of Chalhoub Group’s activity, according to a statement by the group.

According to Chalhoub’s “GCC Personal Luxury In 2021: A Story Of Early Recovery & Growth” report, the Kingdom has thus far demonstrated remarkable growth in personal luxury, reaching $2.2 billion and growing at over 19 percent in 2021.

Fashion leads the way at 50 percent, followed by beauty, jewelry and watches.

The report also stated how the Saudi consumer was still “relatively new to the concept of luxury” with 50 percent of respondents only beginning to purchase such goods in 2021.

Shopping is now a key pastime for Saudis, marked by high spending and frequent purchasing, coupled with high awareness of and preference for top-tier luxury brands – a signal that it is a market ripe for growth over the next few years.

“Saudi Arabia will likely be the driving force of regional growth thanks to government-led initiatives such as education, legislation changes and Ministry of Culture efforts, new retail developments, luxury brands plan to invest into stores and services, and tourism ambition underpinned by Vision 2030,” the report stated.

According to November 2022 report conducted by Saudi Arabia’s Fashion Commission under the Ministry of Culture entitled “A Sector of Opportunity”, the Kingdom’s fashion ecosystem is estimated to contribute to 1.4 percent of the country’s gross domestic product, accounting for $12.5 billion in gross value addition in 2022, driven by consumption relating to retail and wholesale.

Moreover, the expanding fashion ecosystem is expected to contribute to 1.8 percent of the Kingdom's total workforce – 52 percent of which are female and 66 percent are Saudi.

Chalhoub Group says currently 90 percent of their employees in the Kingdom are Saudi nationals, up from 20 percent. 

The growing number has also motivated the group to expand its staff in the Kingdom to up to 6,000 over the next five years to cater to the growing demand for high fashion in Saudi Arabia.