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In addition to financing stores and staffing them, local partners are helpful in interpreting the complex market. There are the tourists—currently Dubai is a popular destination for Russians, Indians and Arabs from other gulf states, among others—but more than 60% of Al Tayer's luxury customers are local residents. About 40% of those are Emiratis, and just under 25% each are Arabs and Europeans. For women, categories like shoes, watches and bags are hot, because those items are visible even with the traditional long black abayas. There are surprises too: one would assume men's preference for traditional robes would limit sales of Western-style suits, but El Khatib says the robes are so loose that men tend to gain and lose weight easily. They don't hesitate to invest in a full new wardrobe of suits when they travel abroad.
In a startling twist in June, the government issued a warning to U.A.E. locals about rampant consumer spending, citing a 122% increase over the past five years and underscoring sky-high per capita spending, more than seven times the average in the rest of the Arab world.
Laws require foreign brands to work with a local partner, and Al Tayer has well-positioned competitors in the region. Christian Dior, Louis Vuitton and other brands in the LVMH Group are represented by Chalhoub Group of Dubai; brands like Prada and Ermenegildo Zegna are tied up with other companies. For years they have jockeyed for position as prestigious shopping centers were opened: the Emirates Towers in 2000 and Mall of the Emirates, with its 450 stores and indoor ski slope, in 2005.
But nothing matches the noise and nail-biting that led up to the late-August opening of the new 3.77 million-sq.-ft. (350,244 sq m) Dubai Mall. The developers are projecting 30 million visitors in the first year. "The earth has a new center," boasts the website of Emaar Properties, the developer of the mall, and even El Khatib is compelled to admit that the fuss is probably warranted. "It is the only mall in the world with 1,200 stores," she says. "It will have one of the largest aquariums in the world. It is adjacent to the tallest building in the world, which has the first Armani hotel—there are so many biggest, tallest firsts that it will be a destination."
Besides the amenities, which also include elaborate children's entertainment facilities and an Olympic-size ice rink, executives say they are enthusiastic about advertising techniques, including "moments of exclusivity" in which brands can pay to have all the LED screens at the commercial center light up with their logo simultaneously.
However, the Dubai Mall is not the final word. Other big, sometimes zanier projects are in the pipeline 90 minutes away in Abu Dhabi, as is a shopping complex that will dwarf the Dubai Mall. The larger venture is planned for an unlikely location, alongside the dinosaur area of the major theme park being built in Dubai. The one-upmanship worries some retail executives. They fear that the rush to open bigger and better malls will destabilize the market and eventually empty out older ones.
Outside the U.A.E., other regional markets, especially Qatar, are heating up. El Khatib's focus these days is on expanding to Saudi Arabia and Qatar by the end of the year. And she plans to launch luxury brands in Kuwait for the first time in early 2009. "Our accent is on geographical expansion," she says. "Now our portfolio is mature, so let's focus on growing these brands in the region." —Sarah Raper Larenaudie / Dubai