Michael Kliger, chief executive of luxury e-commerce platform Mytheresa, is in Dubai for a brief stopover en route from Munich to Jeddah when we sit down to speak about his thriving platform, which seems to be bucking an industry-wide slump this year. In October, Gucci, Balenciaga and Saint Laurent parent company Kering warned of a profit slump, as sales slid 16 per cent from the previous year, while LVMH – which owns brands including Dior, Louis Vuitton, Fendi, Loewe and Bulgari – also announced a decrease, with sales down 3 per cent.
Mytheresa, in comparison, posted a profit increase of 9.8 per cent. Many would no doubt be interested in learning what magic Kliger has up his sleeve, but he insists the strategy is simple. “We have always served what we call the wardrobe building big spenders. There has been no slowdown with these people," he explains.
"They are obviously of financial means that allow them to continue to spend. While clearly there is a sector in the market who are hit by higher inflation and a hit to discretionary spending, the financial, commodity and housing markets, which are often the drivers for our core customers, are doing fine.”
With the post-Covid spending splurge easing, as consumers run out of discretionary cash and grow tired of "revenge shopping", significant slowdowns are being reported all across the luxury sector, as markets, including all-important China, slow to a crawl. While many companies look to the large number of “aspirational customers" – those eager to buy luxury, but for who it remains a major decision – instead Mytheresa focuses on a tiny fraction of clients, who are flush enough to spend more.
“What we do is much more a business-to-business mentality," Kliger says of the platform's targeted approach. "If we have a dinner with 50 people, it is highly effective for us if they are the right 50 people, such as going to Jeddah and having a local ambassador who invites 100 of the most important people in Jeddah. Hopefully, they try us and by delivering on our promises, we build our relationship. That is our core business."
In early October, Mytheresa raised more than a few eyebrows when it announced it was buying the troubled Yoox Net-a-Porter group. A formation of two very different entities – Yoox is an Italian discount site, while Net-a-Porter is a platform for high-end luxury – the two merged in 2015 and have struggled ever since. Most recently it has been Richemont that has struggled to ignite Yoox-Net A Porter, despite owning Chloe, Cartier and Van Cleef & Arpels.
Now it is Mytheresa's turn to have a go and Kliger is confident the platform is perfectly placed to help solve the issues affecting the venture. “We know that [the original merger] was not the right approach, and they have quite different requirements," says Kliger. "From our perspective, one of the challenges is how to operate a company that is sitting on a merged infrastructure."
He argues that the pair need to be separated and provided with dedicated infrastructure. "That’s where we have some unique capabilities," he adds.
“We have the infrastructure specifically built for luxury needs. We have developed our own IT structure, so we believe we can solve this – not overnight, but we can solve it. We are really qualified to advise, help and support. We have been doing this for quite a long time.“
Having started out as a physical boutique in 1987, Mytheresa shifted online in 2006. Since then, it has carved out a niche offering – a sharply curated selection of the most in-demand pieces – and has become a global player in the process. “The strongest market for us is North America. Europe is a little patchy, the UK is great for us but Germany has a very weak consumer sentiment," says Kliger.
"Luxury is something you desire. You don’t need it. So, if your sentiment is weak you say, 'Oh, I will buy it next year.'"
Germany may be slow, but Kliger is emphatic about which market is growing fastest. "Right now, the Middle East is our most dynamic market," he explains.
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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Zakat definitions
Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.
Nisab: the minimum amount that a Muslim must have before being obliged to pay zakat. Traditionally, the nisab threshold was 87.48 grams of gold, or 612.36 grams of silver. The monetary value of the nisab therefore varies by current prices and currencies.
Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.
Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.
Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
UAE Premiership
Results
Dubai Exiles 24-28 Jebel Ali Dragons
Abu Dhabi Harlequins 43-27 Dubai Hurricanes
Final
Abu Dhabi Harlequins v Jebel Ali Dragons, Friday, March 29, 5pm at The Sevens, Dubai
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Co-operation on security initiatives and procurement of defence products
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Cutting red tape on import and export of food
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If you go
The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at.
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.
