RAPAPORT... Damas is the Middle East’s leading international jewelry and watch retailer. Founded in 1907, the company today operates across six countries with more than 300 stores.
 Name: Anan Fakhreddin
From: Dubai
Company: Damas - CEO
Rapaport News: What was your background before joining Damas?
AH: I have been in retail for most of my professional life. I joined Damas in 2010. Before that, I served as the managing director of the World Gold Council in the Middle East and Turkey, and I was the director of diamond promotion services for De Beers in the Gulf region. Prior to De Beers, I was in charge of the retail business in Saudi Arabia for American Express for about 10 years.
Rapaport News: What philosophy do you bring to your position?
AH: Damas is a 100-year-old brand and was the first to bring diamond jewelry into the region. The company was also the first to get into the boutique segment and take the jewelry business out of the gold swoops into the high-end shopping malls. Our philosophy is to understand consumer tastes and introduce the right products at the right prices that can satisfy consumer demand. Our ability to introduce fresh products and designs at appropriate prices, and our focus on encouraging consumer confidence, underlines the philosophy behind the business.
Rapaport News: You recently announced a new corporate strategy. What does this new direction involve and what brought it about?
AH: Because we have such a long history and are so well established in the region, Damas means different things to different people. We were in the high-end, mid-market and the low-end segments of the market. So for some people, Damas was a niche high-end boutique, and for others it was a store that sold gold by weight in adverse market conditions.
In order for our brand to grow, we needed consistency and for the brand to deliver one consistent message. About two years ago, we started to do market research to really understand where the market is going and how to best position Damas against other products. The outcome was a decision to strengthen Damas’ position in the luxury market. We decided to realign the business more with the high-end and middle segments of the market and reduce our involvement in the lower end. We will operate where customer service and the quality of the product has much more appeal to consumers than the price.
As a result, we've changed our segmentation strategy from being based on four categories to two. We recently started opening stores under the new concept, so our Dubai Mall boutique is now our boutique flagship and looks after the international brands and the high-end consumers that want to buy these brands.
We also have the mid-segment stores set up so you can find more generic products that are designed and created by Damas Collections. There are a lot less gold components in these shops. We’re offering more diamond content and are much more focused on branded goods.
Rapaport News: What are some of the trends that have characterized the Middle East market since the 2008 downturn?
AH: The Middle East did not behave as one region when it came to the global economic crisis. It was felt much less in some markets like Kuwait, Saudi Arabia and Qatar, and it was felt a little more in the UAE. But the UAE was also the first to recover from the global crisis.
Obviously, at the beginning there was a big drop in consumer demand. Spending power and consumer confidence declined, and people's appetite for luxury goods fell. Gradually, the market started to improve, especially in the UAE, once tourism picked up about two years ago. Today, we are back to pre-crisis levels when Dubai was at its peak.
Rapaport News: The Middle East is traditionally a gold consumption center; are consumers there starting to look more at diamond jewelry than before?
AH: The simple answer is yes. The Middle East remains one of the largest gold consumer markets in the world but today consumers want more branded goods. They don't want five grams of gold sitting on a scale treated as a commodity. They want something that has a more symbolic value, especially when it comes to gifts that are related to life events such as weddings or the birth of a child.
This is the biggest trend that we see. The chances of finding diamond branded goods are much higher than finding gold branded products. So, it’s more a question of branding that whether to buy gold or diamonds.
Rapaport News: What is the typical diamond engagement ring in the UAE? Are engagement and bridal offerings the bulk of your business?
AH: For a young couple in Dubai, diamond engagement rings are a must have. In my opinion, nobody looks at anything below one carat when it comes to engagement rings. Consumers have become very well educated. They research stones on the internet before they come to you, they compare prices and qualities. But I think a 1-carat to 2-carat, H, VS diamond is more or less a standard here.
For the Saudis, the Qataris and others, they are much more focused on the big bridal sets that include four-pieces with a necklace, earrings, bangle and ring, where you can talk about easily 20 carats to 50 carats of smaller diamonds.
Rapaport News: How was 2013 for Damas?
AH: It was an excellent year. 2013 officially signaled that we are out of the recession. Tourists are back in Dubai, hotels are busy and our stores did extremely well. We also met our target for 17 percent growth over 2012.
Rapaport News: What are your expectations for 2014?
AH: We're hoping that we will keep the momentum and maintain double-digit growth. We have aggressive plans to add new stores, introduce new brands and collections into existing stores and expand our reach to become visible on a global level. We're looking at the major fashion centers in the world to start our global expansion. Currently, we’re mainly in the Middle East and we also have a presence in Turkey.
We're focused on being where the fashion trends come from and where the demand is focused. Obviously you can look at China, the Far East and the major fashion capitals of the world such as London, New York and Paris.
We're looking to compete with international brands, so the expansion will be more focused on our boutique segment and high-end products.
Rapaport News: How has Dubai's growth as a diamond hub affected your operations, if at all?
AH: Because most of the Dubai hub focuses on rough diamonds, it doesn't really affect us much. Yes, the availability of loose stones is now much better than before so you don't need to go anywhere else to source goods, which is something that we started to see four or five years ago.
But in general, I think the story of Damas and Dubai are interrelated. The success story of Damas in a way reflects the success of Dubai, and our positioning depends a lot on the glamour and mystique around Dubai. The more competitive and glamorous the Dubai name is, the more it will benefit Damas as a key brand in Dubai.
Rapaport News: What are the biggest challenges facing you at the moment in the market?
AH: The availability of space is a big challenge for us, especially in Dubai. If a company has the appetite to grow and wants to increase its number of stores, good space is not easily available. That's actually one of the reasons we started to consider global expansion.
Rapaport News: What are you most concerned about in the industry at large? If you could make any change to the industry, what would it be?
AH: Jewelry retailing is still very primitive in its majority, unlike with other products. Mostly it is family businesses, which are underdeveloped and don’t really add much value to the industry as a whole. So the majority of the activities that we do don’t add value.
If there was anything I would want to change, it would be to see more corporations and professional companies running the jewelry industry. Then we would be competing for market share but also working to grow the market, increase consumer confidence and deal with some of the biggest challenges that we are all facing today.
Rapaport News: What advice would you give to someone starting out in the diamond and jewelry industry?
AH: Build consumer confidence and make sure that people really trust your name. This was the key factor behind the success of Damas. Today, an invoice from Damas is as good as any gemological lab certificate. It takes us a lot of effort every day in terms of our quality control, who we buy with, how we inspect our goods and how much control we have over the shops and over the products. But it really pays off at the end.
Rapaport News: Where do you see your business 10 years from now?
AH: I hope that we will fulfill our new vision to transform Damas from a famous local brand to a famous international brand from Dubai. So in 10 years, Damas will hopefully have many branches in all major cities in the world, will be recognized globally as a luxury player and we will secure a bigger market share, including an international presence.
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