A few years ago, Egypt opened its arms to international brands. In a short timeframe, local malls were filled with top-notch brands and updated collections.
While 2015 witnessed multiple opening ceremonies of the world’s most coveted names, 2016 went in the opposite direction. After some complicated regulations and negative economic decisions, a few brands have allegedly cancelled their plans to expand in Egypt while others announced the end of their investments in the local market.
As for local customers, the events did not only affect their spending here, but also influenced their shopping experience abroad. Even though the number of Egyptian designers, stylists, and bloggers is evidently increasing, the industry is no longer taking progressive steps.
Daily News Egypt met Izzat Traboulsi, the regional managing director of Hugo Boss. The international brand took a courageous step a few weeks ago when it opened a new branch in Egypt after a brief break.
Traboulsi talked about international brands, local purchasing behaviour, and the future of fashion investment in Egypt.
Considering the current economic changes, what encouraged you to reopen Hugo Boss in Egypt?
Cairo is a big market and it has a lot of potential. Since we used to distribute the brand, we had an eye on its turnover and yield. It was quite satisfactory to do the move. Sales were not so high, but we saw some potential for growth by controlling the brand.
We wanted to shoot two birds with one stone: enhancing the brand image and increasing sales.
When I signed to join the Egyptian market, the situation was still good. It only deteriorated a year ago when we were already in the implementation phase. Nevertheless, we have no regrets as we still managed to have a very positive outcome. Within only three months of operations, the brand managed to position itself in the local market.
We are quite satisfied with the current sales and that is a strong indication. Our aim is to be the leader in the men’s fashion segment in the long-run, and to look past the present market situation as it is quite difficult. We knew that by taking this challenge, we would enhance our business and grow it.
To which extent did the current economic changes affect your international brands?
So far, we are still doing well as the end-consumers accepted the new pricing. They have digested the new prices and that helps.
Today, our prices are slightly cheaper than abroad due to the high exchange rate. What helps as well is that all credit banking [card payments] have certain limits, which decreases clients’ spending abroad.
However, if the currency further devaluates, it is going to be a very difficult environment. What affects us is that the currency is volatile; accordingly, prices keep changing on a daily basis. Pricing is becoming an impossible task.
Lately, many registration regulations have been created. To which extent did they affect your collection’s size and timing?
This is a crucial point. We are obliged to downsize the collection as it is taking much more time to clear the goods. The time period to sell seasonal collections at full price shrank significantly. Therefore, the only available solution at the moment is to have earlier deliveries and lower the budgets.
How would you evaluate the current local purchasing behaviour?
Boss is a brand that offers upper premium products, as well as some luxury ones. Nowadays, local customers are highly aware of international brands, luxury products, and global standards.
Accordingly, people that are used to buying expensive luxury brands are still buying from us. Quality and luxury are our main quality and the end-consumer knows that about us.
Between media, celebrities, influencers, and VIP clients’ word of mouth, which is a more important factor when promoting an international brand? Why?
I personally prefer the impact of VIP clients since they are our loyal clients that have a sincere effect on others.
Since we know that we have uplifted the brand experience in Egypt, we are confident about their word of mouth. We have changed the name of the game in Egypt and we currently offer the best experience in terms of shop concept, service, fashion consultancy, and product offering.
Our target was to build a store that meets international standards. We wanted to give the end-consumers the same experience they would get in London, Paris, and New York. Our offering is very similar to Europe now and the clients are already aware of the difference.
Would you consider the local market currently encouraging for international brands?
Yes and no. Yes, because you can get the best deals now in terms of rent. No, because the currency is too volatile and the environment is very indecisive.
It is very difficult to work in an uncertain environment. The market is good, but today the situation is not clear enough and that is dangerous. The recent political decisions against international brands are not helping.
What do international brands need at the moment?
They need some support from the government in terms of new import regulations, as well as the availability of foreign currency.