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

EXCERPT from the Digital IQ Index®: Middle East | Prestige
To access the full report, contact membership@L2ThinkTank.com

October 17, 2013

SCOTT GALLOWAY
NYU Stern

Middle East | Prestige
© L2 2013 L2ThinkTank.com


Digital IQ Index®:


October 17, 2013

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

Middle East ≥ Dubai ≥ Dubai Mall

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

Concentration of Middle East Luxury Goods Market
FY2012 (in USD billions)

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

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
43%

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

26%

$8.54B

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

$3.66B

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

13%

$2.20B

$1.10B

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

Middle East

UAE

Dubai

Dubai Mall

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).

Source: Bain & Company | Fondazione Altagamma

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

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

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.

2

Digital IQ Index®:



Destination

October 17, 2013

Middle East Media Spend & Growth by Channel

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

2012 vs 2016E (in USD millions)

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

Mobile

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

Total

Digital

$21,975

$17,158

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

$2,923

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

$871

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

$7

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

$58

2012

Digital IQ = Shareholder Value

2016
Source: eMarketer

This 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

Revenue Per Available Room (RevPAR) Reported by Region
2009–2013 (in USD)

improve our methodology and findings.

2009

2010

2011

2012

SCOTT GALLOWAY
Professor of Marketing, NYU Stern
Founder, L2

2013 YTD
Average

$126.13

scott@stern.nyu.edu
Average

Average

$85.99

$83.27
Average

$60.55

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.

Asia Paciﬁc

Americas

Europe

Middle East

Source: STR Global


3


Digital IQ Index®:


October 17, 2013

Digital

High Net Worth
Proportion of Millionaire Households
Global Ranking and Percentage:

Kuwait

#1 Qatar 14.3%

Bahrain
Qatar

Saudi Arabia

#3 Kuwait 11.5% #6 Bahrain 4.9%

Estimated number of Internet users, 2013: 90 Million
projected to reach 413 Million by 2015
#8 UAE 4.0%

UAE

Middle East
Spotlight

94% Male

6% Female

Liquid assets $46

UAE

Kuwait

Qatar

Bahrain

27.1M

8.3M

3.3M

1.8M

1.2M

million
million

41,755,070

1990

55% Self Made

Saudi Arabia
60%

online presence

forecast to grow to $15

Billion by 2015

53% of shoppers older than 26 shop online
43% of consumers in the GCC make
online purchases at least once per month

31% Inheritance/Self Made

14% Inheritance

Billion in 2012
Billion in 2015

M-commece forecasted to grow to $4.9

Source of Wealth:

2010

Qatar
61%

B2C E-commerce sales were $9

Most likely to represent the Finance & Banking sector
or an Industrial Conglomerate

not an Oil Baron

Gulf Coast
Population Total

61% growth

Kuwait
62%

Only 15% of businesses have an

Population:

Saudi Arabia

UAE
71%

Average net worth $151

Demographics

Bahrain
77%

Average Middle Eastern ultra high
net worth individual is Married
Median Age
56 years

Internet Penetration by Country:

Only 32% of women in the
Arab world shop online

Median Age:
E-commerce
Saudi Arabia Bahrain

Kuwait

UAE

Qatar

Male

27.0

32.8

30.0

32.0

33.4

Female

24.8

28.6

26.6

25.0

28.0

47% Prepaid Cards

30% Credit Cards

30% Bank Transfer

GDP Per Capita:

E-commerce sites in the Middle East selling physical
goods report that the payment method for 70–80%
of orders is Cash on Delivery

Sources of E-commerce payment:

28% Cash on Delivery

Importance of Platform for Information:

27% PayPal
Qatar
E-commerce Users by Age Bracket:

Saudi Arabia

Bahrain

Kuwait

UAE

Qatar

$19,890

$23,410

$46,461

$66,626

$97,967

<16 31%

16–25 41%

26–35 52%

35+ 53%

Bahrain

Saudi Arabia

UAE

TV

58%

84%

92%

87%

Internet

72%

85%

78%

82%

Newspapers

48%

73%

65%

72%

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


4

Digital IQ Index®:



October 17, 2013

About the Ranking

The Methodology

30%
Site

30%
Digital Marketing

20%
Mobile

20%
Social Media

Effectiveness of Brand Site

Search, Display, and Email Marketing Efforts

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

Search:
Traffic, SEM, SEO, Web Authority 

Compatibility, Optimization, and
Marketing on Smartphones, and Tablets

Brand Presence, Community Size,
Content, and Engagement

Mobile Site:
Compatibility, Functionality, Load Time

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

Innovation & Brand Buzz:
Multichannel Brand Initiatives, Local Network
Brand Mentions
Email Marketing:
Frequency, Content, Promotion, Language &
Regional Presence, Trigger Emails

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

Twitter:
Followers, Growth, Frequency, Programming
YouTube:
Views, Number of Uploads, Subscriber
Growth, Viral Videos, YouTube Search
Visibility
Emerging Social Media:
Pinterest, Instagram, Google+


5

Digital IQ Index®:



October 17, 2013

Brand List
in Alphabetical Order
BEAUTY 18
WATCHES & JEWELRY 22

HOSPITALITY 14

RETAIL 5

FASHION 35

- Local Brands

6


Digital IQ Index®:


October 17, 2013

Digital IQ Ranking
RANK

BRAND

1

RANK

Four Seasons Hotels

9

T

Accor

12

Meydan City Corporation

Landmark Group

12
Marks and Spencer

T

19

T

Fairmont Raffles Hotels International

7

Proctor & Gamble

17

L’OCCITANE Group

6

T

InterContinental Hotels Group

11

5

Chalhoub Group

17

Rotana Hotel Management Corporation

4

Damas International

Burberry Group

10

T

BRAND

16

Starwood Hotels & Resorts Worldwide

2

RANK

15

8
Hilton Worldwide

2

BRAND

Mouawad Jewelry

20

T

Gucci Group

Chanel

14
Jumeirah International

L’Oréal Group


7


Digital IQ Index®:


October 17, 2013

Key Findings Site
Middle East Site Configuration

Site Localization & E-Commerce

September 2013, n=94

Only 37 percent of global sites actively cater to the

Global Brands

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.

Local Brands

Brands in Index
Global 81

Local 13

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

Site Catering to Region
Yes 30

No 51

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

Configuration
.ae or
17
equivalent

/ar 13

brands—Splash Fashions and Damas Les Exclusives—are
E-commerce enabled. Sixty-two percent of local sites lack
Shipping Internationally to Middle East

Arabic content.
Cash on delivery is the payment method for 70 percent

4

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

Shipping from
Global Site

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

Middle East Site Language Capability

Gucci AE and Damas Les Exclusives sites.

September 2013
Global Brands, n=30

67%
38%

Complete Arabic

Local Brands, n=13

7%
0%

Partial Arabic

27%
62%

No Arabic

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.


8

Digital IQ Index®:



October 17, 2013

Key Findings Digital Marketing
Email Marketing in the Middle East

Email

July–September 2013

Email is an important marketing tool in the region, with open
rates of almost 20 percent (comparable to 18.9 percent in

Global Brands, n=30

87%

Local Brands, n=13

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

47%

46%

welcome message. Brands send very few emails—just over
0.6 per week. With a lack of E-commerce, email could be an

13% 15%

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

8%

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

27%

23%

effective source of store traffic. However only 31 percent of

Email
Sign Up

8%

0%
Link in English
Emails for Arabic

Arabic Text
in Emails

Welcome
Email

Emails Are
Personalized

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.

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

40%

30%

20%
7%

0.0

0.1– 0.5

0.6–1.0

1.1–2.0

3%

2.1–3.0

Emails Per Week

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.


Average:
0.63 per Week

9

Digital IQ Index®:



October 17, 2013

Key Findings Social Media
Social Media
Eighty-eight percent of Internet users in the Middle East
access social networking sites daily. The primary activity is

Middle East Social Media Penetration

exploring and discussing pop culture, community issues,

September 2013

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

Global Brands, n=81

Local Brands, n=13

(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

41%
100%

20%
69%

21%
62%

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

Facebook

Twitter

YouTube

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.

19%
46%

Instagram

11%
31%

Pinterest

12%
23%

Google+

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.


10

Digital IQ Index®:



October 17, 2013

Table of Contents
Click logo to return here.

Click screen shots with this icon to view online!

Click to jump to:

5 Spotlight: Middle East
6 Methodology
7 Brand List
8 Top 20 Ranking

9 Key Findings
Site

24 Flash of Genius
24 Rotana Hotels: Mobile Integration Moves

9 Site Localization & E-commerce

Beyond Booking

11 Souq.com

25 Marks and Spencer: Offline/Online Synergy

12 Store Locator & CRM

26 Bloomingdale’s: Local Programming via

13 Middle East Hotel Site Sophistication

Online Personas

Digital Marketing

27 Faces: Digital Beauty Tips

14 Search

28 The Ritz-Carlton: Building Awareness

15 Email

Among Influencers

Social Media
17 Social Media
18 Facebook
19 Twitter & LinkedIn

29 L2 Team
30 About L2

20 YouTube
21 Instagram
Mobile
22 Mobile Site
23 Mobile Apps


11

Digital IQ Index®:



About L2

October 17, 2013

?

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.

Upcoming Events
L U N C H : WATC H ES & J E W EL RY

October 24, 2013 · New York City
October 29, 2013 · Geneva

R ESEAR C H

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

L U N C H : BE A U TY

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

October 31, 2013 · New York City

strengths

L U N C H : FA S H I O N

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

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

November 22, 2013 · New York City
L2 FORUM

November 6 & 7, 2013 · New York City

EVENT S

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.

Upcoming Research
D I G I TA L I Q I N D EX ® R E P O RT:

Watches & Jewelry
Beauty
Fashion
Sportswear
Homecare

Topic immersion in a relaxed environment that encourages open discussion.

40–80 attendees
CONSULT ING

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.
MEMBER SHIP

For membership info and inquiries: membership@L2ThinkTank.com


12

© L 2 2013 L 2 ThinkTank.com Reproductions Prohibited
This report is the property of L2 Think Tank. No copyrighted materials may
be reproduced, redistributed, or transferred without prior consent from L2. L2
reports are available to L2 Members for internal business purposes.

A THINK TANK
for DIGITAL INNOVATION
51 East 12th Street, 2nd Floor
New York, NY 10003
L2ThinkTank.com
info@L2ThinkTank.com


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

Recommandé

Recommandé

Contenu connexe

En vedette

En vedette (20)

Dernier

Dernier (20)

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