We met with Damas CEO Anan Fakhreddin at the company’s Dubai headquarters to discuss a flourishing watch portfolio, new strategies and what 2014 has in store for this market leader.
In your own words can you tell us about the professional journey that has led to you becoming CEO of Damas?
Well I’ve been in retail almost all my life. I started my career with American Express many years ago although I don’t want to remember the exact number of years! I was in charge of the retail network for card acceptance in Saudi Arabia and from there I focused on retail. I continued with American Express for nearly ten years and then moved to De Beers where I established the regional office in Dubai in late 1999, early 2000. My primary assignment was to help develop the retail industry and, of course, sell more diamonds. Then I was with the World Gold Council for nearly 15 months, officially in charge of the Middle East and Turkey but - in reality - the global retail network and the restructuring of the US market. Then Damas came.
So taking into account your significant experience, in which was does the field of watches differ from that of high jewellery and in which ways are they similar?
I think the biggest point of difference is that watches are the most significant product you can target to men. Arab men don’t traditionally consume jewellery and so the main product that you can catch them with is a watch. On average a Middle Eastern man will change watches twice a year and they are usually Swiss made, expensive pieces. Unlike jewellery however, we don’t usually have much control over the design components. With jewellery, even if it’s an international brand, because of the size of Damas we can usually influence areas such as the design, the colour or the price point. At present watches would be less than 10% of our total turnover but we’ve already identified it as a growth area and I’m confident that in 2014 this percentage will increase.
How do you maintain your level of success in the face of what is an increasingly expanding and more competitive market place?
Our leadership comes off the back of two basic facts. One is simply size. We have 300 shops in the region and this obviously gives us a lot of credibility. Secondly is our product innovation. I’m very proud to say that from a brand equity point of view, if you look at our segmentation guidelines, they are more or less the guidelines for the market right now. When we identify niches and create strategies for how to treat them, these eventually become the benchmark for the market. It’s annoying that we get copied all the time but this is the price you have to pay as a market leader!
Speaking of innovation, it’s listed as one of the four key pillars of Damas. How does the company continue to innovate in respect of the watch sector?
Our influence on the design is limited but we always keep abreast of what is happening in terms of new products. We recently sent a delegation to Switzerland to get an understanding of what the big groups are launching and what the direction is for 2014. More importantly however, we try to showcase new brands that will help us open up new segments in the market.
As CEO then, what strategies have you personally implemented within the company to ensure it stays ahead?
I think first of all a focus on maintaining the credibility of the brand and ensuring consumer confidence in Damas. Then a focus on assessing and predicting consumer tastes and producing products that cater to this, at prices the competition cannot compete with. We have great economies of scale and we always put them into play every time we buy.
In the not too distant past there was a period of intense public scrutiny with regards to Damas. Does that level of attention create a greater degree of pressure as CEO?
After the acquisition of the consortium a year and a half ago, all of these issues went away. The stories were never around the finances of the company, Damas as a business model was solid and it was profitable. Unfortunately during a certain period of time, there were issues with where the assets of Damas were invested beyond the jewellery market. It really affected the future of the company but, if you look at the jewellery component alone, it was always healthy and always profitable.
Are you able to say that the issues are fully resolved?
When I first came onboard the regulator in the market was still on the case. We had regular meetings and strict instructions to ensure that the compliances were sound. I think very shortly we’ll be able to announce to the market that we’ve achieved that 100% and that all of these issues are history.
Damas is particularly synonymous with the GCC region but do you have any plans to substantially increase the company’s footing in other markets?
Yes, absolutely. The new model is to grow Damas from being a famous brand in Dubai to being a famous international brand from Dubai. So obviously we’ve started looking for investment opportunities and making expansion plans. From the fashion capitals in the western hemisphere to the new markets in the East, we’re looking both ways now.
Where do you see the greatest source of opportunity?
I think in terms of scale, obviously the eastern hemisphere makes a lot more sense. The luxury market in China is by far number one, followed by India in some respects.
Do you have a core watch brand?
I think our flagship would be Parmigiani Fleurier, which we’ve had for four or five years. We are very proud of the relationship and have an exclusive agreement with them. While we have 20 or 25 other brands, I think Parmigiani sits as the main jewel in the Damas watch crown.
If you look at your watch offering, what do you think it says about Damas as a whole?
I think we had a confused offering until about two years ago, when the plan was to acquire from every brand that was available. It was a time in which Damas lost a sense of direction in terms of who we are and which consumer segments we market to. Now that the new strategy is adopted and announced, we have a very clear direction. The cleanup process is still ongoing, but the hope is that we’ll be able to replace all of the exiting brands with much more mature and sophisticated brands that are more suitable for our new positioning.
What other interesting developments can we expect to see from Damas in 2014?
In terms of watches our appetite for big brands is definitely there. We’re hoping to attract at least two and negotiations are well under way. We’re hoping by the end of the year we will have at least two senior brands sitting on our shelves. Overall the company is in a very good position. 2013 was very good for us and was one of the best years in the history of Damas in terms of net profit. I hope in 2014 we will do more of the same.
Are you able to take some of the credit for that?
I certainly hope so!