Digital iq-index-middle-east-2013-excerpt

© L2 2013 L2ThinkTank.com

October 17, 2013

SCOTT GALLOWAYNYU Stern Middle East | Prestige

EXCERPT from the Digital IQ Index®: Middle East | Prestige To access the full report, contact [email protected]

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October 17, 2013Digital IQ Index®:

Middle East | Prestige


© L2 2013 L2ThinkTank.com. Circulation of the report violates copyright, trademark and intellectual property laws.

Middle East ≥ Dubai ≥ Dubai Mall The Middle East luxury market is approximately the same size as Russia’s luxury market—eighth

largest in the world.2 The market is concentrated. The United Arab Emirates (UAE) represents

40 percent, and the majority of luxury sales in the UAE are traced to Dubai, nearly a third of the

region’s total.3 The Dubai Mall accounts for half of the luxury purchases in the city-state.4

Critical Mass?At first glance, the Middle East appears immune to the digital contagion spreading through

emerging markets. Digital ad spending in the region is $1 billion and, despite strong growth,

will reach only 13 percent of media spend in 2016 (half the global average).5

Although the Internet audience is comparatively small (90 million users, 4 percent of

worldwide total), per capita penetration is high in the five countries examined.6 Saudi Arabia

has reached the 50 percent inflection point, while Bahrain, Kuwait, Qatar, and the UAE have

breached 70 percent—over indexing versus the region (40 percent) and world (34 percent).

In the UAE, the pillars of online retail are forming:

• 16 percent of Internet users shop online

• 73 percent of Internet users engage in social media

• 61 percent smartphone penetration

• 50 percent of shoppers visit a store’s website in advance of an outlet visit.7

As consumers wait for retailers with established market presence to shift from an offline

mentality to active online experimentation, first movers are filling the void. In March, Tejuri.com

launched, becoming the region’s first e-shopping mall.8

1. “Worldwide Luxury Markets Monitor,” Bain & Company, May 16, 2013.2. Euromonitor International, Passport Dashboard: Luxury Goods, FY12.3. “Dubai booms again on back of the Arab Spring,” Chris Arsenault, Al Jazeera, June 1, 2013.4. “Dubai accounts for one-third of luxury shopping in Middle East,” Cleofe Maceda, gulfnews.com, July 11, 2013.5. “Worldwide Ad Spending Forecast: Emerging Markets, Mobile Provide Opportunities for Growth,” Alison McCarthy, eMarketer, January 2013.6. “Middle East Internet Users, Population, and Facebook Statistics,” Internet World Stats, June 2012.7. “UAE online retail market on course for $1bn barrier,” Gillian Duncan, The National, September 9, 2013.8. “Region’s first e-shopping mall launches in UAE,” Stephen McBridge, ITP, March 4, 2013.

The Arabian Peninsula, including the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Bahrain, represent an $8.5 billion market for luxury goods.1

Overlooked?

Source: Bain & Company | Fondazione Altagamma

Concentration of Middle East Luxury Goods MarketFY2012 (in USD billions)

43%

13%

26%

Middle East

$8.54B

UAE

$3.66B

Dubai

$2.20B

Dubai Mall

$1.10B



https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCsQFjAA&url=http%3A%2F%2Fwww.fccihk.com%2Ffiles%2Fdpt_image%2F5_committees%2Flibrary%2FLibrary Luxury%2F2013 Bain Luxury Study Spring Update.pdf&ei=xXsnUuWlJpLBsAS3oIGoCg&usg=AFQjCNFLKRYGQjldE0iFgOeP8DEF61MqdQ&bvm=bv.51495398,d.cWc

http://www.aljazeera.com/indepth/features/2013/05/201352911311160616.html

http://gulfnews.com/business/retail/dubai-accounts-for-one-third-of-luxury-shopping-in-middle-east-1.1208186

http://www.slideshare.net/catchadigital/emarketer-worldwideadspendingforecast

http://www.internetworldstats.com/stats5.htm

http://www.thenational.ae/business/industry-insights/retail/uae-online-retail-market-on-course-for-1bn-barrier

http://www.itp.net/mobile/592466-regions-first-e-shopping-mall-launches-in-uae

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Asia Pacific Americas Europe Middle East

$83.27

$60.55

$85.99

$126.13

Average

Average

Average

Average

DestinationAfter a long winter of economic crisis, the hospitality industry has resumed aggressive

expansion as rooms still command a higher RevPAR than the United States and APAC.9,10,11

Starwood Hotels & Resorts Worldwide plans to open 50 new properties across the Middle

East and Africa over the next five years. Abu Dhabi will become the first city to boast two

St. Regis properties. Hilton Worldwide has a Waldorf Astoria planned for Doha (Qatar) and a

convention center to open later this year.12

The activity reflects a targeted investment. With tourism down 5 percent last year due to

political turmoil, regions perceived as less volatile benefit.13,14 Dubai’s 9.9 million overnight

visitors in 2013 made it the seventh most trafficked global destination.15 A contender for the

World Expo 2020, Dubai could challenge the current number one destination (Bangkok).16

Robust digital investment by hotel brands is evident—four of the top five and nine out of

the top twenty brands in L2’s Middle East ranking are hotels.

Digital IQ = Shareholder ValueThis study attempts to quantify the digital competence of 81 global and 13 local prestige

brands. Our aim is to provide a robust tool to diagnose digital strengths and weaknesses

and help brands achieve greater return on incremental investment. Similar to the medium we

are assessing, our methodology is dynamic and we hope you reach out with comments that

improve our methodology and findings.

9. “Occupancy in the Middle East And Africa Region Up 4.0% June 2013,” Hotel News Resource, July 24, 2013.10. “Hotel Occupancy in the Americas Region Up 2.3% to 69.3% August 2013,” Hotel News Resource, September 20, 2013.11. “Occupancy in the Asia Pacific Region Up 3.0% to 71.8% August 2013,” Hotel News Resource, September 20, 2013.12. “Why the Middle East is the new luxury travel destination,” Erin Shea, Luxury Daily, March 20, 2013.13. “Middle East sees 13% rise in inbound tourists,” Sarah Algethami, gulfnews.com, August 26, 2013.14. “Tourists Wary of Turmoil in the Middle East Are a Boon to Southern Europe,” Raphael Minder, The New York Times, September 1, 2013.15. “Mastercard Global Destination Cities Index,” MasterCard Worldwide Insights, 2Q 2013.16. “Dubai could be world’s no 1 for tourists by 2020,” Daniel Shane, Arabian Business, May 29, 2013.

Middle East Media Spend & Growth by Channel 2012 vs 2016E (in USD millions)

Revenue Per Available Room (RevPAR) Reported by Region2009–2013 (in USD)

SCOTT GALLOWAYProfessor of Marketing, NYU Stern Founder, L2

2009 2010 2011 2012 2013 YTD

Source: eMarketer

Source: STR Global

20162012

$21,975

$2,923

$58

$17,158

$871

$7

Mobile Digital Total

[email protected]



mailto:scott%40stern.nyu.edu?subject=Middle%20East%20Prestige%20

http://www.hotelnewsresource.com/article72879.html



http://www.luxurydaily.com/is-the-middle-east-the-new-luxury-travel-destination/

http://gulfnews.com/business/tourism/middle-east-sees-13-rise-in-inbound-tourists-1.1224343

http://www.nytimes.com/2013/09/02/business/global/tourists-wary-of-mideast-are-boon-to-southern-europe.html?pagewanted=all

http://c15210660.r60.cf2.rackcdn.com/wp-content/uploads/2013/05/MasterCard-Global-Destination-Cities-2013-Report.pdf

http://m.arabianbusiness.com/dubai-could-be-world-s-no-1-for-tourists-by-2020-503461.html

mailto:scott%40stern.nyu.edu?subject=L2%20Digital%20IQ%20Index%3A%20Middle%20East%20Prestige

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Kuwait

Bahrain

UAE

QatarSaudi Arabia

Demographics

Saudi Arabia

Saudi Arabia

Qatar

Qatar

UAE

UAE

Bahrain

Bahrain

Kuwait

27.1M 1.8M8.3M 1.2M

Gulf Coast Population Total

19902010

41,755,07061% growth

3.3M

QatarUAEKuwaitBahrainSaudi Arabia

Male

Female

27.0

24.8

32.8

28.6

30.0

26.6

32.0

25.0

33.4

28.0

Estimated number of Internet users, 2013: 90 Million projected to reach 413 Million by 2015

Internet Penetration by Country:

Digital

B2C E-commerce sales were $9 Billion in 2012

forecast to grow to $15 Billion in 2015

M-commece forecasted to grow to $4.9 Billion by 2015

Only 32% of women in the Arab world shop online

E-commerce sites in the Middle East selling physical goods report that the payment method for 70–80%

of orders is Cash on Delivery

Importance of Platform for Information:

Population:

Median Age:

GDP Per Capita:

Bahrain77%

UAE71%

Kuwait62%

Saudi Arabia60%

Qatar61%

Source: BCG, IMF, Nations Online, Mintel Global Luxury, Go-Gulf, Majalla, Wamda, Northwestern University, Wealth-X Research

QatarUAEKuwaitBahrainSaudi Arabia

$97,967$66,626$46,461$23,410$19,890

E-commerce Users by Age Bracket:

<16 31% 16–25 41% 26–35 52% 35+ 53%

53% of shoppers older than 26 shop online

Only 15% of businesses have an online presence

43% of consumers in the GCC make online purchases at least once per month

High Net Worth

Proportion of Millionaire HouseholdsGlobal Ranking and Percentage:

#1 Qatar 14.3% #3 Kuwait 11.5% #6 Bahrain 4.9% #8 UAE 4.0%

Average Middle Eastern ultra high net worth individual is Married

Source of Wealth:

E-commerce

Sources of E-commerce payment:

Median Age56 years 6% Female94% Male

31% Inheritance/Self Made

14% Inheritance

55% Self Made

Average net worth $151 millionLiquid assets $46 million

47% Prepaid Cards

28% Cash on Delivery

30% Credit Cards

30% Bank Transfer

27% PayPal

TV

Internet

Newspapers

58%

72%

48%

84%

85%

73%

92%

78%

65%

87%

82%

72%

Middle EastSpotlight

Most likely to represent the Finance & Banking sector

or an Industrial Conglomerate not an Oil Baron



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About the Ranking

30% Digital MarketingSearch, Display, and Email Marketing Efforts

Search: Traffic, SEM, SEO, Web Authority

Innovation & Brand Buzz: Multichannel Brand Initiatives, Local Network Brand Mentions

Email Marketing: Frequency, Content, Promotion, Language & Regional Presence, Trigger Emails

The Methodology

30% SiteEffectiveness of Brand Site

Language & Local Content Technology Store Locator & Account Search, Navigation, & Product E-commerce Category Specific Functionality

20% MobileCompatibility, Optimization, and Marketing on Smartphones, and Tablets

Mobile Site: Compatibility, Functionality, Load Time

Mobile Applications: iOS & Android (Phone & Tablet) Presence, Popularity, Functionality

20% Social MediaBrand Presence, Community Size, Content, and Engagement

Facebook: Likes, Growth, Tabs & Applications, Responsiveness, Engagement

Twitter: Followers, Growth, Frequency, Programming

YouTube: Views, Number of Uploads, Subscriber Growth, Viral Videos, YouTube Search Visibility

Emerging Social Media: Pinterest, Instagram, Google+



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Brand Listin Alphabetical Order

BEAUTY 18

FASHION 35

HOSPITALITY 14

RETAIL 5

- Local Brands

WATCHES & JEWELRY 22



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Digital IQ Ranking

RANK BRAND

8

9

10

11

12 T

12 T

14

L’Oréal Group

InterContinental Hotels Group

Gucci Group

Burberry Group

Four Seasons Hotels

Landmark Group

Accor

RANK BRAND

1

2 T

2 T

4

5

6

7

Rotana Hotel Management Corporation

Marks and Spencer

Starwood Hotels & Resorts Worldwide

Hilton Worldwide

Fairmont Raffles Hotels International

L’OCCITANE Group

Jumeirah International

RANK BRAND

15

16

17 T

17 T

19

20

Proctor & Gamble

Chanel

Chalhoub Group

Damas International

Mouawad Jewelry

Meydan City Corporation



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Key Findings SiteSite Localization & E-CommerceOnly 37 percent of global sites actively cater to the

Middle East market, and just over half (57 percent) serve

the region through a local domain. Only four brands—

Alexander McQueen, Jimmy Choo, Michael Kors, and

Bloomingdale’s—ship to the region from their global sites.

Among the Gulf Cooperation Council (GCC) countries,

43 percent of Internet users make an online purchase at

least once a month.17 However, only one-third of prestige

brand sites are E-commerce enabled in the region—and of

those, three-quarters are hotel brands. Only three non-hotel

brands—Bottega Veneta, Burberry, and Gucci—are selling

online in the region. Local brands are also behind the curve.

Only two hotel brands—Rotana and Meydan—and two retail

brands—Splash Fashions and Damas Les Exclusives—are

E-commerce enabled. Sixty-two percent of local sites lack

Arabic content.

Cash on delivery is the payment method for 70 percent

of online purchases of physical goods.18 However, no global

brands offer this option and only one local brand measured in

the Index—Splash Fashions—provides COD. Wire transfer, a

common payment form in the region, is only available on the

Gucci AE and Damas Les Exclusives sites.

17. “The Next, Next Thing,” Jon Weinberg, The Majalla, September 2, 2011.18. “E-Commerce in the Middle East grew 300% in the past year,” Nancy Messieh, The Next Web, June 3, 2012.

Middle East Site ConfigurationSeptember 2013, n=94

Brands in Index

Site Catering to Region

Con�guration

Shipping Internationally to Middle East

Global Local 1381

Yes 30 No 51

.ae orequivalent 17 13/ar

4Shipping fromGlobal Site

Middle East Site Language CapabilitySeptember 2013

Global Brands, n=30 Local Brands, n=13

Global Brands Local Brands

Complete Arabic Partial Arabic No Arabic

67% 7% 27%

38% 0% 62%



http://www.majalla.com/eng/2011/09/article6895

http://thenextweb.com/me/2012/06/03/e-commerce-in-the-middle-east-grew-300-in-the-past-year/

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Key Findings Digital MarketingEmailEmail is an important marketing tool in the region, with open

rates of almost 20 percent (comparable to 18.9 percent in

the U.S).19 Almost 90 percent of global brands offer email

sign-up, though follow-up is weak—less than half send a

welcome email. Local brands fare worse, with less than

half offering email sign-up and only 23 percent sending a

welcome message. Brands send very few emails—just over

0.6 per week. With a lack of E-commerce, email could be an

effective source of store traffic. However only 31 percent of

brands include a link to a store locator, and just 10 percent

list brick-and-mortar locations.

Mobile-optimized email is key as more than 71 percent of

mobile Internet users in the Middle East rank email as their

primary mobile Internet activity.20 Though all messages were

viewable on a mobile device, the majority of emails received

were designed for the desktop or laptop.

19. “2013 Email Marketing Metrics Benchmark Study,” Silverpop, June 2013.20. “71% of Mobile Internet Usage is for Email in Middle East,” Andrew Bonar, Email Expert, February 4, 2011.

Email Marketing in the Middle EastJuly–September 2013

Percent of Brands Sending Emails by FrequencyJuly–September 2013, n=30

Email Sign Up

Arabic Textin Emails

Link in EnglishEmails for Arabic

Welcome Email

Emails ArePersonalized

87%

13%8%

47%

27%

46%

15%

0%

23%

8%


40%30%

20%7%

3%

0.0 0.1–0.5 0.6–1.0 1.1–2.0 2.1–3.0

Emails Per Week

Average:0.63 per Week



http://www.silverpop.com/Documents/Whitepapers/2013/WP_EmailMarketingMetricsBenchmarkStudy2013.pdf

http://emailexpert.org/71-of-mobile-internet-usage-is-for-email-in-middle-east/

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Key Findings Social MediaSocial MediaEighty-eight percent of Internet users in the Middle East

access social networking sites daily. The primary activity is

exploring and discussing pop culture, community issues,

sports, and politics—brands and E-commerce are not

(currently) top of mind.21,22 Facebook leads in a crowded

market for platforms.

With an estimated 58 million users, Facebook is the

dominant platform in the region.23 For content, beauty

brands are best at embracing local languages—Vichy,

L’OCCITANE, Bobbi Brown, and Avon all have pages in

Arabic. Some of their tabs are also in the local language,

demonstrating an ability to target the local market at a

deeper level. Hotel brands lag, with almost all tabs in English

and some replying to Arabic comments in English.

Marks & Spencer Arabia and Ritz Carlton Dubai Financial

Centre punch above their weight class as statistical outliers

in engagement relative to their community size, while

beauty brands Vichy, Lancôme, and Clarins are outliers

below the mean.

21. “Internet Usage in The Middle East – Statistics and Trends [Infographic],” Go Gulf, August 2, 2013.22. “New Study on Media Use in the Middle East,” Neil Spencer, Social Media Today, May 27, 2013.23. “Social media usage in the Middle East,” Ahmed Gabr, Wamda, June 16, 2013.

Middle East Social Media PenetrationSeptember 2013


Facebook Twitter YouTube

PinterestInstagram Google+

41%100%

20%

69%21%62%

19%

46%

11%31%

12%

23%



http://www.go-gulf.com/blog/internet-usage-middle-east/

http://socialmediatoday.com/neil-spencer/1492396/media-use-middle-east

http://www.wamda.com/2013/06/social-media-usage-in-the-middle-east-infographic

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Table of Contents

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Spotlight: Middle East

Methodology

Brand List

Top 20 Ranking

Key FindingsSite

9 Site Localization & E-commerce

11 Souq.com

12 Store Locator & CRM

13 Middle East Hotel Site Sophistication

Digital Marketing

14 Search

15 Email

Social Media

17 Social Media

18 Facebook

19 Twitter & LinkedIn

20 YouTube

21 Instagram

Mobile

22 Mobile Site

23 Mobile Apps

Flash of Genius24 Rotana Hotels: Mobile Integration Moves

Beyond Booking

25 Marks and Spencer: Offline/Online Synergy

26 Bloomingdale’s: Local Programming via

Online Personas

27 Faces: Digital Beauty Tips

28 The Ritz-Carlton: Building Awareness

Among Influencers

L2 Team

About L2

9 24

29

30

5

6

7

8



12





About L2 ?

L2 is a think tank for digital innovation.

We are a membership organization that brings together thought leadership from academia and industry to drive digital marketing innovation.

RESEARCH

Digital IQ Index®: The definitive benchmark for online competence, Digital IQ Index® reports score

brands against peers on more than 600 quantitative and qualitative data points, diagnosing their digital

strengths

and weaknesses.

L2 Collective®: Series of benchmarking reports designed to help member brands better understand

resources, human capital, budgets, and priorities supporting digital strategies.

EVENTS

Forums: Big-picture thinking and game-changing innovations meet education and entertainment.

The largest gatherings of prestige executives in North America.

300+ attendees

Clinics: Executive education in a classroom setting with a balance of theory, tactics,

and case studies.

120 –180 attendees

Working Lunches: Members-only lunches led by digital thought leaders and academics.

Topic immersion in a relaxed environment that encourages open discussion.

40–80 attendees

CONSULTING

Advisory Services: L2 works with brands to garner greater return on investment in digital initiatives.

Advisory work includes Digital Roadmaps, Social Media Strategy, and Organizational Strategy engagements.

MEMBERSHIP

For membership info and inquiries: [email protected]

Upcoming Events

LUNCH: WATCHES & JEWELRY

October 24, 2013 · New York City

October 29, 2013 · Geneva

LUNCH: BEAUTY

October 31, 2013 · New York City

LUNCH: FASHION

November 22, 2013 · New York City

L2 FORUM

November 6 & 7, 2013 · New York City

Upcoming Research

DIGITAL IQ INDEX® REPORT:

Watches & Jewelry

Beauty

Fashion

Sportswear

Homecare



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