Back in April we wrote about a Singapore bag-rental service that mimics an idea that originated with Bag Borrow or Steal in the U.S. Now toujourschic.ae, a site for UAE residents, offers the same designer-handbag deal for fashionistas bit by the recession. Prices start at $79 for a two-day rental.
As in much of the rest of the world, the UAE’s luxury sector has been the hardest hit segment of retail, as consumers save more and focus on necessities. Luxury purchases are now looked at as long-term investments—which makes one question whether today’s price-sensitive consumers will go for short-term emotional satisfaction at a not-so-cheap cost.
Still, as we previous noted, a “rental economy” seems to make sense at a time of prevailing uncertainty, when consumers are cautious about long-term financial commitments and the appeal of ownership is waning. Indeed, Rent the Runway, a new venture in the U.S., is betting that this idea will work with designer dresses. It will be interesting to see if copycats again pop up around the world or if cooperative consumption—as we’ve previously dubbed this business model—has its limits.
Photo Credit: toujourschic.ae
National Bonds Corp. in Dubai has launched a “Save for Life” promotion in an effort to change people’s attitudes toward saving. (NBC, described as the National Saving Scheme of the UAE, is a three-year-old joint stock shareholding company in which the government of Dubai holds a 50 percent stake.) A Mercedes is given away in each weekly drawing—taking place from October through December—for customers with holdings of at least 3,000 AED (about $800); those with 10,000 AED (about $2,700) or more are eligible for a weekly prize of 1 million AED.
At the end of the promotion, a grand prize drawing (open to customers holding at least 25,000 AED) will give away a furnished two-bedroom apartment, a Mercedes and 1 million AED.
It’s hard to imagine that these incentives will ultimately lead to a life-long savings habit or culture. Most people just need to be educated on managing their money. In Dubai, most of the expats are simply there to make money—before the recession, rising rents and the glitz and glamour of the city left them little inclined or able to save, and now they’re even less able to do so. But habits are hard to kick, and those who are accustomed to spending will continue doing so, at least to the extent that they can.
The recession has undermined the grandiosity of Dubai: Mega-projects have been put on hold, and many of those with “secure” jobs suddenly found themselves on a plane back home. The bubble has burst, leaving those who believed in the sparkle and glamour of the city in shock. But one big project has come to fruition: Dubai’s first metro recently launched, a project that’s not about extravaganza but about something that touches the everyday lives of its residents.
The tagline, “My City, My Metro,” rides perfectly on the atmosphere of pessimism brought about by the downturn, and in a simple and direct way tries to restore feelings of security and belonging to those who have lost it this year. It will take time, healthy economic indicators and a lot of positive publicity to restore trust in this city—but a city as a product has to connect with its “consumers” to give a reason to believe.
Photo credit: twocentsworth
Dubai’s hotel industry has been hard-hit by the downturn. In the first half of 2009, revenue per available room fell as much as 35 percent compared to the previous year, according to a report from STR Global and Deloitte & Touche Middle East. (By contrast, hotels in the 22 Middle East cities surveyed experienced an overall drop of 17 percent.)
In the midst of Dubai’s hotel price wars, one approach stands out. Taking a cue from Priceline’s “Name your own price” option, the Monarch has launched a “Name your price for luxury” online auction. The process is simple: Just enter the five-star hotel’s Web site and bid on a room, a spa treatment, a meal or the entire package. All bidders get a 5 percent discount at the Mizaan restaurant.
At the least, the tactic is likely to help generate traffic to the Monarch’s spa and restaurants. And, most important, it manages to achieve three things: connect with consumers by engaging them in the auction game; create a memorable experience in contrast to a clutter of bland promotions; and build a database where participants are matched with their preferred hotel experience. Faced with a crisis, it’s always wise to look sideways from time to time.