Byredo - Global Distribution Expansion Plan

CASSIDY WEBBER | HALEY LIN | YUEYAO CHEN | ZIYI WANG LXFM 745 | ALESSANDRO CANNATA | SUMMER 2021

MISSION STATEMENT TO TRANSLATE MEMORIES AND EMOTIONS INTO PRODUCTS AND EXPERIENCES THAT ARE TIMELESS, MEANINGFUL, AND INSPIRATIONAL.

table of contents BRAND ANALYSIS

GEOGRAPHIC EXPANSION

PROMOTIONAL STRATEGY

Company Summary

Screening Opportunities

Promotional Strategy

Current Distribution

Target Consumers

Financial Plan

Retail Brand Identity

Store Location

Competitive Analysis

Store Design

Strategic Planning Process

CITATIONS

company summary

INTRODUCTION MILESTONES CURRENT STATUS GROWTH PLANS

INTRODUCTION Byredo is founded in 2006 by Ben Gorham, who is passionate about art and fragrances. After he graduated with a fine arts degree from Stockholm Art School, he met with Pierre Wulff, a perfumer who convinced Gorham to create scents.

Gorham was fascinated by how fragrances elicit a strong connection between scent and memory rather than paintings. Making scents fulfilled a dream of Gorham's since he wanted to create a scent to remember his father and to better connect to his childhood. From there, Byredo was born and differed from other luxury brands in that it originates from emotions and memories that are translated into products and experiences. Hence, the name of the brand stems from redolent, which means strongly reminiscent and fragrant.

MILESTONES

Gorham was a basketball player, painter

The inception of Byredo. Four more

and first started off making candles.

scents were created.

Generating sales of about $30 million.

Manzanita Capital bought the majority of shares.

2008

2004 2006

Pre-2004

2013 The first fragrance was created.

Byredo became the second bestselling fragrance line in Barneys

CURRENT STATUS Byredo is a private company that Manzanita Capital owns. MC is a beauty sector specialist investment group that focuses on premium niche companies to provide genuine insight and value for long-term goals and perspectives. In 2017, Byredo attended Paris Fashion Week with their first collection of handbags and leather goods. Since the brand is focused on making extremely highquality products, the makeup line, for instance, has product packaging made out of steel, and lipsticks have magnetized closure. In May 2021, Byredo launched Open Skys limited-edition fragrance.

GROWTH PLAN As a luxury brand that aspires to be like Hermes, Gorham plans to grow his business slowly continuing to relentlessly focus on quality products and brand-building. Similarly, Hermes' brand philosophy can be summarized by a quote of their former CEO Jean-Louis Dumas, "We don’t have a policy of image, we have a policy of product." Also, like Hermes, Byredo does not heavily rely on marketing and strives to be authentic, unique, and personal.

Byredo's CEO has observed that most market mistakes are made by making short-term decisions for instant growth and temporary success. Instead, he has been adamant about making long-term decisions and actively avoids becoming a hot topic that fades away into the past. Currently, Byredo totters between a connoisseur brand and a star brand. They do not rely on marketing and emphasize quality products, yet they strive to become a superstar brand one day. With select distribution and careful selection of stores worldwide, Byredo plans to expand and grow by offering a wide range of product categories and extensions to diversify and enter new product segments. Soon makeup will become one of the main pillars of the company, like its fragrances. Finally, Bryredo is planning to enter the skincare market in the future.

current distribution

OVERVIEW DISTRIBUTION MODELS

CURRENT DISTRIBUTION OVERVIEW Best known for fragrances, European luxury brand Byredo has a global approach to distribution and sells products through various distribution channels, consisting of directly operated stores, an e-commerce site, luxury multi-brand retailers, and duty-free shops.

Currently, Byredo's directly operated stores cover 8 countries/regions around the world. Thanks to its global expansion strategy, its brand sales point reached more than 400 in 2015, in which Byredo began to grow in Asia through a partnership with Hong Kong Lane Crawford. In the same year, it entered the United States and opened a boutique in New York. The brand began a slow path of global expansion and is deploying its worldwide strategy by getting a strong footprint in luxury retail. In 2018, Byredo opened its first flagship store and pop-up store in the French capital, further expanding its retail business. In recent years, Byredo has still focused on investing in mature and emerging markets to strengthen its global influence, especially in the United States and the niche perfume market in Asia. It has enhanced its directly operated stores through expansion to provide its unique aesthetics and the best customer experience.

In the past two years, Byredo has entered the fashion industry. With its ambitious design, Byredo has taken swift action to expand its influence, planning to open more stores in the United States. In addition, last year, Byredo's new beauty line was released, which indicates Byredo's further expansion direction. It already opened its first pop-up beauty store in Dallas, Texas.

In 2019, Byredo's annual sales reached 68 million dollars with a 40% profit margin.

DIRECTLY OPERATED STORES

MULTI-BRAND RETAILERS

Currently, Byredo has 49 directly operated stores in eight different countries. There are

Byredo's products can be found in some of the most important multi-brand retailers in

13 stores in the United States, 17 in the United Kingdom, 5 in Sweden, 5 in France, 6 in

the world, including Space NK, Neiman Marcus, Saks Fifth Avenue, Bergdorf Goodman,

China, 1 in Russia, 1 in the United Arab Emirates, 1 in Korea. Most flagship stores are

Barneys New York, Bloomingdales, Net-a-Porter, SSENSE, Nordstrom, and Harrods.

located in urban cities, such as New York, London, Hong Kong, Stockholm, Paris, and

However, the current luxury multi-brand retailers only cover Byredo's perfumes and

Seoul. The brand’s headquarters is located in Stockholm, Sweden.

body care products, and its fashion and make-up categories are not available.

E-COMMERCE

DUTY-FREE SHOPS

Byredo is committed to digital accessibility. Compared with directly operated stores, its

Byredo can be found in high-end airport terminals globally, including New York City,

official e-commerce site provides global transportation, covering 26 countries/regions.

Los Angeles, Korea, Paris, Moscow, and Hong Kong.

retail brand identity analysis

PURPOSE PRODUCTS PROPERTY PRODUCT PRESENTATION RETAIL PROMOTIONAL ACTIVITIES PEOPLE

PRODUCTS

RETAIL BRAND IDENTITY ANALYSIS The retail brand identity analysis is a framework to analyze how brands use products, property, product presentation, retail promotional activities, and people to shape the

PEOPLE

PROPERTY

identity of a retail brand. As a modern Swedish luxury fragrance, jewelry, and leather goods brand, Byredo is reinventing the luxury world by creating products that are dominated by emotions. Most of the store design of Byredo combines Scandinavian and local styles to create a “warm modernism” environment that presents a balance of raw and refined materials. The retail stores are a reflection of Byredo’s high-end design and superior quality.

RETAIL PROMOTIONAL ACTIVITIES

PRODUCT PRESENTATION

PRODUCTS Products have multi-sensory properties that can trigger emotional reactions and cognitive processes. A product line can share the potential similarities that support the brand identity, which customers should identify. As synonymous with fine fragrances, Byredo’s fragrances' creation is strongly connected with emotions, which are inspired by places, feelings, or certain periods of memories. For example, the first scent Ben Gorham made is called “Green,” which he remembered his father smelling like a child.

PRODUCT OFFERING Byredo’s product range currently offers perfume, home fragrance, hand and body care, byproducts, and makeup. The categories in the perfume segment ($45-$330) include perfumes, discovery sets, travel editions, perfume extracts, hair perfumes, and roll-on perfume oils. The home fragrance segment ($45-$450) ranges from candles, room sprays, textile perfume, and accessories. In the hand section, hand lotion, hand wash, rinse-free hand wash, and soap are all available. The body care section ($37-$330) contains body lotion, body wash, and hair perfume.

The byproducts ($65-$850) range from eyewear, small leather goods, footwear, and home goods. Finally, the makeup line ($30-$2,650) includes color sticks, lipsticks, lip balm, mascara, liquid eyeliner, eyeshadow palettes, and a vanity box.

PERFUME

MAKEUP

HOME SCENTS

HAND & BODY CARE

BYPRODUCTS

Mojave Ghost 50 ml. $190

Tokio Rose Lipstick $42

Tree House Candle 240 g. $85

Suede 450 ml. $85

The Certified Pilot $420

La Sélection Boisée 12 ml. $190

Vanity Box $2,650

Bibliothèque Room Spray 250 ml. $120

Blanche Body Lotion 225 ml. $65

Cross Body Pouch $850

Flagship Store: Los Angles

Retail Shop: Hong Kong

Pop-Up Store: Dallas, Texas

Byredo’s flagship stores mainly showcase perfumes, along with the bath oils, body lotions, and metal tubed hand creams in their own metal contraptions to ensure optional product usage. Larger flagship stores like the wonder floor in Los Angeles’ Melrose Avenue also display the full range of products, including leather goods. Besides, some of Byredo's retailer shops offer full assortments of the brand’s fragrance and beauty products as well as its leather goods, like the Byredo Hong Kong retailers at Lane Crawford IFC Mall and Times Square, which are available exclusively in the city at the new counters. As to pop-up stores, the personal and home scent collections are still the backbone of Byredo, but the NorthPark pop-up shop also features Byredo’s new makeup line, as well as home goods and eyewear.

PROPERTY Property has a huge impact on a retail brand’s identity. It can enhance its image by providing a sensory experience that contributes to positive consumer behavior. The headquarters of Byredo is located in Master Samuelsgatan 10, in Stockholm, Sweden. Byredo’s first flagship store was opened in Sweden, then it opened its first US flagship store in June 2015, and its first UK flagship store in June 2018 in London. Byredo’s first store in London is a three-story townhouse. It displays its offering of fragrances, beauty, leather goods, and collaborative projects presented in a new gallery space, featuring work from different artists and future collaborations. Since London is one of the first markets and one of Byredo’s biggest markets, Byredo has many stores in London. For now, Byredo has its independent retail stores in eight countries, 49 DTC stores worldwide. The design of Byredo's flagship stores in each country is not consistent. They are all combined with local characteristics and the aesthetic of the Byredo brand.

THE WONDER FLOOR The largest store of Byredo is on the West Coast in the United States, which is located in a full block on Los Angeles’ Melrose Avenue. The 282-square-meter interior has been executed by Swedish designer Christian Halleröd and local practice Montalba Architects. Since Ben Gorham hopes the place can present the collaborative nature of Byredo and change over time. The Wonder Floor is more like an informal gallery than a retail store since it encourages customers to use the space more communally and socially.

CHINA Shanghai, Beijing, Hong Kong (4) FRANCE Paris (3), Lille, Lyon KOREA

Korea

Sweden

Seoul RUSSIA Moscow

United States

SWEDEN Stockholm (4), Gothenburg UNITED ARAB EMIRATES Dubai

China

France

UNITED KINGDOM London (12), Leeds, Manchester (2), Glasgow, Birmingham United Kingdom

UNITED STATES New York (2), Dallas, Los Angeles, San Francisco, Atlanta, Houston (2), Los Angeles (2), Miami (2), Washington DC.

Russia

United Arab Emirates

PRODUCT PRESENTATION Product presentation refers to how products are displayed and packaged as well as store design.

PRODUCTS DISPLAY The flagship store in New York near the Gloffice showcases Byredo’s leather goods in the most obvious place on full display throughout the store, stretching along to the back room. But the store isn't overly scented. The candles are kept in glass homes to maintain their integrity and customers’ ability to smell the scents continually. Nothing about the store is overwhelming, which makes it all simply there for customers to experience.

STORE DESIGN The store design of Byredo in every city and country is not consistent. They incorporate the local style while staying modern and simple. Aluminum has played an important role in Byredo’s store interior. The iconic aluminum shelving and counters, as well as a galvanized aluminum floating wall and mechanical crane, are two features iconic to the brand. Making a striking contrast to metal, the interiors also incorporate neutral tones and softer shapes. Another feature commonly found in Byredo stores is that space often features custom-made Italian terrazzo.

FRAGRANCE BOTTLE - DESIGN AND PACKAGING As a brand famous for its perfume, the design and packaging of Byredo’s fragrance bottle are a perfect wordless expression of the brand. The whole concept of the package is minimal, simple with clean fonts. The cap of the bottle is usually black or white, and the body is transparent with a concise label. Each bottle comes in a beautiful white box engraved with the logo. Inside each box comes with a tiny envelope, with Ben Gorham's explanation of its project: “Right out of art school, I began developing a creative project around smell and memory called Byredo. Short for “by redolence”, meaning reminiscent of. The ambition of the time was to use personal memories to get people to tap into an idea of a “collective memory”. I truly believed that smell was subjective in its entirety but few the idea of a common touch pain opened peoples minds when trying new smells. The first five smells I made resonated amongst people and I understood my newfound interest in smell would continue to grow. There was something truly fascinating about an invisible medium that instantly took me places and also evoked much emotion. Another realization was that in order for me to continue developing this work there needed to be some level of commerce. Perfume as a product was both accessible but also abstract and seemed a perfect vehicle for my ideas and notions. In late 2006 the project Byredo became a brand and a company. In this form I continue to develop meaningful projects and products.”

RETAIL PROMOTIONAL ACTIVITIES Ben Gorham's diversified background, open-mindedness, and fluid perspective influenced his business practice. In terms of brand marketing, he deliberately avoided marketing and sold Byredo by selling art. Ben Gorham said: "With consumer goods, people think there is this need to explain what they are selling somebody completely; they think if people understand it, they'll buy it. In art, it's different because if the subject is understood completely, there is a tension lost, and it makes the art less interesting."

The theory explains the stripped-back branding, multiple cross-genre projects, and his stores that have been deliberately designed differently.

SOCIAL MEDIA Byredo is active only on two social media platforms – Facebook and Instagram, with 143K likes and 398K followers, respectively. As a brand recognized for its elegant minimalist aesthetic, The ode of Byredo to minimalism extends its social imagery and even captions. The Instagram posts of its products are often against simple, white backdrops and simple calls to action over a lengthy copy. Byredo often launches different campaigns to market new products or limited-edition products on Instagram and Facebook pages, like using hashtags like #ByredoNightVeils and #ByredoSymphonique with exquisite photographic works to attract customers' attention, thereby informing them of the launch of new products and where they can buy these products.

Besides, Byredo focuses on products while sharing high-end and high-quality photographic posts on social media platforms. On the post, it tags all the behind-thescenes creative team members, as well as features the information of products, which helps customers know exactly what to buy.

During the pandemic period, Byredo embraced video content across its social channels to engage with consumers: it has posted IGTV and Facebook Videos featuring popular MUAs and beauty directors such as Isamayah Ffrench to showcase its makeup and how to use it. These tutorials bring the brand to life and interact directly with its customers, harnessing the credibility of industry influencers.

COLLABORATION WITH CELEBRITIES Instead of using one endorser, Byredo asked some high-profile models, celebrities, and influencers to share short “scented stories” for its Instagram reels. As explained by the brand, “our brains integrate smell with information about space and time to form episodic memories.” Byredo created an idea that scent can be the thread that stitches stories and memories together in people’s minds, which might take customers back to a period or a place, a moment, or a feeling. In the Instagram reels series, celebrities like Rosie Huntington-Whiteley and Virgil Abloh talk through their favorite olfactive memory.

SOCIAL MEDIA CAMPAIGN

BILLBOARDS MOCKUP ON SOCIA MEDIA

POSTCARDS COLLABORATED WITH ARTISTS Bal d'Afrique perfume is a love letter from Ben Gorham to Africa. To celebrate the 10th anniversary of Bal d'Afrique perfume, Byredo invited photographer Viviane Sassen to create a series of travel postcards, which were intervened and hand-printed by children on the African continent. The project aims to promote Africa's influence over time, especially the way its countless cultures shape to dance, art, and music. Ben Gorham and MM Paris collaborated to provide the visual backdrop for the Bal d'Afrique anniversary celebration.

PEOPLE Brand representatives can be divided into two categories: actual and figurative.

ACTUAL Byredo doesn’t have an official celebrity endorser or a figurative image like mannequins in its physical stores. Ben Gorham, the founder of Byredo, acts as a symbol of the brand identity. Gorham keeps pushing Byredo to collaborate with the art and fashion industry, making the brand features with artistic and fashionable temperament.

STORE STAFF The attitude and appearance of the retail sales associate interacting with consumers affect the brand experience. The staff work for Byredo is characterized as culturally diverse, with six nationalities among employees. They are not required to wear uniforms or suits when working in the store; they often wear comfortable clothes with a cordial service attitude.

competitive analysis

COMPETITORS PERCEPTUAL MAPS

19-69, as a luxury cult brand founded by the Swedish artist and

Acqua di Parma is an Italian luxury fragrance brand founded by

Founded in the Sultanate of Oman in 1983 to be The Gift of Kings,

product developer Johan Bergelin in 2017, has focused on producing

Carlo Magnani in 1916. The brand aims to instill the Italian gentleman

AMOUAGE aims to redefine the Arabian art of perfumery and

perfumes and candles since it was established. The brand aims to

style by adopting fresh and modern vibes. Acqua di Parma is one of

garner a global reputation for bringing innovative modernity and

develop products that are suitable for any gender and allow the

the LVMH group’s brands. The fragrances offered by the brand are

true artistry to all its creations. The brand offers product lines

individual to explore beauty across the borders.

100% made in Italy.

including perfumes and candles, bath and body essentials, and home fragrances, etc.

PRICE RANGE: $65 - $2,195

PRICE RANGE: $33 - $425

PRICE RANGE: $40 - $450

STORE NUMBERS: around 170 stores, most of them are retailer-

STORE NUMBERS: 11 freestanding stores with over 150 retailer-

STORE NUMBERS: over 530 stores worldwide, including retailers,

owned

owned stores

franchisees, and licensees

The House of Creed was founded in London in 1760 by James Creed,

Diptyque is a luxury fragrance company. In 1961, Christiane Gautrot,

Kilian is a luxury fragrance brand founded in 2007 in Paris by Kilian

who became the supplier of custom-made clothes, scented leather

Desmond Knox-Leet and Yves Coueslant founded Diptyque in Paris,

Hennessy, one of LVMH's founders Kilian Hennessy's grandson. The

gloves, and commissioned fragrances for the Royal Court. The

France. The founders initially designed fabric and then decided to

brand was acquired by The Estée Lauder Companies in 2016. There

House of Creed is one of the world’s oldest fragrance houses,

start making scents for matching their textiles. In 1963, the company

are more than 30 fragrances Kilian offered. Besides fragrances,

spanning seven generations from father to son for over 250 years.

began to produce scented candles with refined flavors, which

Kilian also provides products in different categories such as

As a fragrance house that has heavily relied on an ancient infusion

brought the company a huge success. In 1968, Diptyque composed

makeup, bath & body, and scented jewelry.

technique to capture the raw and rare materials of each perfume,

its first eau de toilette, L’Eau. The brand's products are renowned for

Creed has created a legacy of unrivaled scents. The brand

their exceptional quality and artistic designs. In addition, the makers

nowadays provides personal perfumes, home fragrances, and body

of Diptyque candles are famous for never having used synthetic

care products to customers.

fragrances in their products. Diptyque currently is under Manzanita Capital, the parent brand of Byredo, since 2005.

PRICE RANGE: $50 - $1,760

PRICE RANGE: $35 - $350

STORE NUMBERS: over 150 stores worldwide, most of them are

STORE NUMBERS: 82 stores, including retailers worldwide

located in the UK

PRICE RANGE: $55 - $870 STORE NUMBERS: 7 stores located globally

Established in 1870, Penhaligon's was originally a barbershop located in central London. Its founder, William Penhaligon, was inspired by the aromas of the Turkish baths, and he soon diversified into fragrances. The brand was quickly embraced by London society

Le Labo is a luxury fragrance brand founded in 2006 based in New York City. It was acquired by its current parent brand Estée Lauder Companies, in 2014. They started by selling handcrafted and personalized perfumes and have quickly expanded their product line

Jo Malone is a luxury fragrance brand founded in 1994 in London. In 1999, the brand was acquired by the Estée Lauder Companies. The brand is a British lifestyle brand that sells fragrances, candles, and body care products. The signature cream packaging with black

to include candles, grooming products, soaps, etc.

edges is the brand’s icon.

PRICE RANGE: $14 - $288

PRICE RANGE: $14 - $1020

PRICE RANGE: $20 - $198

STORE NUMBERS: 24 stores globally and 1 stockist in London, UK

STORE NUMBERS: over 50 stores across the world

STORE NUMBERS: over 500 stores, including retailers, franchisees,

at the time. Since then, the brand has produced its products in England until nowadays. Though Penhaligon's, like general luxury brands, utilizes new fragrance technologies, the brand still adopts the bottle that echoes William's original design. The products of Penhaligon's showcases how the brand blends the heritage with innovation.

wholesalers, etc.

PERCEPTUAL MAPS

strategic planning process

CUSTOMER ENVIRONMENT SWOT ANALYSIS MARKET ANALYSIS DIFFERENTIAL ADVANTAGES

CUSTOMER ENVIRONMENT

DEMOGRAPHICS Despite having launched in sixty-two markets, Byredo does not have a defined target market since their target groups have always been diverse. On any given day, a mixture of 18 to 85year-olds will come into the store and try on similar products.

BUYING EXPECTATIONS

Turkey

85

Argentina

82

Nigeria

79

Spain

74

Russia

67

Thailand

55

Singapore

45

U.S.

41

China

27

Japan

16

Luxury seekers seek out quality scents that last all day and that do not quickly fade.

BUYING MOTIVATIONS Premium and niche fragrance lovers buy these products to stand out from the crowd and be viewed as unique. Other motivations include buying these perfumes to connect to a certain memory or use for a special day. Finally, because Byredo is a cult fragrance brand, consumers will purchase purely for the bandwagon effect.

PURCHASING PRACTICES On April 23, 2021, a statistic was uploaded that measured which countries spritzed on perfume regularly. Turkey, Argentina, Nigeria, Spain, and Russia were among the top five (Figure 1).

0%

25%

50%

75%

Figure 1. The Countries That Like to Spritz on Perfume | Statista | 2021

100%

Niche brand.

Low brand awareness

Specialty stores are trending

Cheap knock-offs

Strong brand image

The byproduct section is

Demand for premium products

Saturated Industry

underdeveloped

increasing

No marketing & no loyalty program

Demand for experiences is

Diverse products & store locations Global Expansion

increasing Has not developed a rich brand heritage yet

MARKET ANALYSIS

Top 5 (2021) in million USD 1. Japan

13,648

2.

13,122

The United States

3. China

8,204

4. France

3,408

5.

2,765

UK

MARKET SIZE Revenue in the Prestige Cosmetics & Fragrances segment amounts to $75,468 million in 2021. The market is expected to grow annually by 6.97% (CAGR 2021-2025). In global comparison, most revenue is generated in Japan. In fact, this country spent around $13,648 million in 2021. After Japan, the United States generated the second-largest revenue, China, France, and then the UK. It is predicted that this order will continue until 2025.

40 30 20

PROFITABILITY In 2020, the flavor and fragrance market was valued at 35.8 billion dollars (Figure 2).

10 0

businesses to operate at full potential.

TRENDS

33.2

15

35

35.8

2017

2018

2019

2020

2021

Figure 2. The Growth of the Flavor and Fragrance Market | Statista | 2021 Report

DISTRIBUTION CHANNEL Currently, for the beauty, fragrance, and fashion markets, direct-to-consumer and omnichannel are critical for

28.5

100,000

75,000

Artisanal and premium fragrances have surpassed mass fragrance products in the last few years. In 2018, premium perfumes accounted for the largest share of more than 65.0%. This trend has been growing due to

50,000

customer's emphasis on quality, personalization, and exclusivity. From 2019 to 2025, premium perfumes are expected to grow the fastest CAGR of 3.9% (Figure 3).

25,000

0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Prestige Cosmetics

Prestige Fragrances

Prestige Skin Care

Figure 3. Revenue in the Prestige Cosmetics & Fragrance | Statista | 2021 Report

DIFFERENTIAL ADVANTAGES Byredo has distinguished itself with its products by its recognizable curved, simplistic packaging and abstract, creative, and whimsical approach to products. These features expand beyond the aesthetic qualities of the products but to the fragrances as well. Each formula is simple and addresses a unique memory or experience. Thus, these fragrances are unlike any other offered on the market.

Byredo is slowly integrating diverse product categories that separate it from other niche fragrance and beauty competitors. Despite the adoption of slow brand growth, it still has the broadest assortment of products than its competitors. Additionally, they collaborate with related industries to pursue their beliefs that scents and byproducts are artworks.

screening opportunities

COUNTRY SELECTION PESTEL ANALYSIS MARKET ANALYSIS KEY PLAYERS

RANK

COUNTRY

RANK VS. 2017

REMARKS

-1

India drops to number two in 2019 but remains a stand-out retail leader. Modern retail should

INDIA 2

SAUDI ARABIA 7

+4

grow at an 18 percent clip for the next five years, with online retail—especially grocery—taking off.

Saudi Arabia rises four notches in 2019. The country’s reforms and economic restructuring are starting to have a positive impact. The young population and consumers’ capacity to spend are attracting major retailers and boosting online sales.

BRAZIL 16

+13

While the country struggles to recover from a severe recession, promising factors sparked its 13position rise in the Index. A stronger economic structure and slowing inflation will support consumer spending, especially for mass merchandisers and online.

Figure 1. A.T. Kearney Global Retail Development Index Highlights | 2019 | ATKearney

2019 GLOBAL RETAIL DEVELOPMENT INDEX

COUNTRY

MARKET ATTRACTIVENESS

COUNTRY & BUSINESS RISK

MARKET SATURATION

TIME PRESSURE

FINAL SCORE

POPULATION (MN)

GDP (USD)

NATIONAL RETAIL SALES

1,371

7,874

1,202

60.2%

60.9%

66.8%

88.8%

69.2

33

55,944

125

84.4%

69.4%

16.1%

49.9%

54.9

209

16,154

472

65.5%

67.4%

25.4%

28.1%

46.6

INDIA

SAUDI ARABIA

BRAZIL

Figure 2. A.T. Kearney Global Retail Development Index | 2019 | ATKearney

2020 GROWTH PERFORMANCE FOR PREMIUM BEAUTY & PERSONAL CARE

INDIA

SAUDI ARABIA

PREMIUM COLOR COSMETICS

PREMIUM COLOR COSMETICS

PREMIUM COLOR COSMETICS

1.7% 16.8%

19.6%

-20%

-4.5%

2.6% 4.4% 10.7%

8.2% 1302.8

6229.2 PREMIUM FRAGRANCES

-16.1% -4.5%

11.2% 17.7%

1.7% 4.0% 12.1%

8.2% 4,624.3

8931.6 0%

20%

40%

798.6 PREMIUM FRAGRANCES

PREMIUM FRAGRANCES

-38.1%

-40%

BRAZIL

-40%

CURRENT YEAR GROWTH

0%

20%

CAGR 2015-2020

40%

CAGR 2020-2025

Figure 3 | A.T. India, Saudi Arabia, Brazil Growth Performance | 2020 | Passport

1846.4 -40%

0%

20%

40%

SALES OF PREMIUM BEAUTY & PERSONAL CARE

INDIA

SAUDI ARABIA

BRAZIL

12,500

10,000

100,000

10,000 7,500

75,000

7,500 5,000

50,000

5,000

25,000

0

2,500

2,500

44,289.4

51,631.5

61,349

70,381.5

80,826.2

92,310

2020

2021

2022

2023

2024

2025

0

6,965

7,885.2

8,351.1

8,945

9,673.3

10,564.7

2020

2021

2022

2023

2024

2025

Figure 4 | A.T. India, Saudi Arabia, Brazil Retail Values (MN) 2020-2025 | 2020 | Euromonitor

0

7,021.2

7,100.1

7,609.7

8,177.3

8,811.1

9,515

2020

2021

2022

2023

2024

2025

CONSUMER SHOPPING BEHAVIORS

INDIA (N=1,029)

SAUDI ARABIA (N=1,009)

BRAZIL (N=1,028)

19

30

50

40

30

20

10

0

46

50

42

I like to visit shopping malls

38

40

47

I would rather buy fewer, but high quality things

32

36

27

I regularly buy gifts for my family and/or friends

34

34

24

I look for personalized and tailored shopping experiences

32

34

I seek niche brands that are hard-to-find and unique

36

33

34

Buying eco/ethicallyconscious products makes me feel good

22

27

I seek products with easy to understand labels

SAUDI ARABIA

PROPOSED COUNTRY As a result, Saudi Arabia is the best choice for Byredo because it has the highest GDP. Also, its government is actively improving the country by building programs and more infrastructure. Although India had the highest growth performance in 2020, Saudi Arabia has the lowest market saturation, ideal for beauty and fragrance brands. Compared to the population, which the total number in the country only accounts for 16% of Brazil's and 2% of India's, Saudi Arabia's growth market in sales is relatively high. Therefore, one can conclude that Saudis regularly shop and have high purchase power.

According to the three countries' consumer shopping behaviors, Saudis had the highest score with liking to visit the mall, regularly buying gifts, and seeking niche brands. Thus, Saudi Arabia is the ideal choice based on the A.T Kearney Index, growth performance and sales, as well as customer shopping behavior patterns.

PESTEL ANALYSIS

POLITICAL The Kingdom of Saudi Arabia is a West Asian country located on the Arabian Peninsula. The country borders Yemen, Oman, UAE, Bahrain, Qatar, Kuwait, Iraq, and Jordan. Riyadh is the capital of Saudi Arabia. With a total area of 830,000 square miles, Saudi Arabia is the largest country in the Middle East. The country has a population of more than 34.3 million, making it the 40th largest country in the world.

Saudi Arabia follows the unitary Islamic monarchy and hereditary dictatorship as its government and administrative system.

The Saudi Constitution does not allow the formation of any political party. The King has all the power; however, he must abide by Islamic law. Muhammed-bin-Salman is the current King and the crown prince of Saudi Arabia.

Saudi Arabia faces potential external threats, especially from Iran and Iran-related groups, which intensified their activities and attacks on regional rivals in 2019. Although it is unlikely to escalate into a full-scale regional war, Saudi Arabia is at risk of further attacks on its territory. In addition, violence in Yemen has spread to Saudi Arabia many times, and cities near the Yemeni border are at higher risk. The threat seems to have diminished, perhaps due to the fact that Saudi Arabia’s foreign policy has recently become more pragmatic. In particular, the negotiations between Saudi Arabia and Qatar have made progress, and Saudi officials have become more involved in negotiations with the Houthi rebels in Yemen.

Domestically, support for King Salman and his heir, Crown Prince Mohammed bin Salman, seems to be firm. According to Marsh’s Political Risk Map 2020, Saudi Arabia has a relatively stable political environment with a middle score of 60-69.

ECONOMIC The large-scale public works policies implemented by the authorities, as well as foreign direct investment and a robust banking and financial system, have made Saudi Arabia the number one regional economy and one of the largest in the world. In 2019, the country's GDP reached approximately US$793 billion. The per capita GDP is US$55,944. The official currency of Saudi Arabia is the Saudi riyal (1 US dollar is equivalent to 3.75 Saudi riyals). Additionally, it is the only G-20member country in the region.

Saudi Arabia's economy is almost entirely based on oil, with GDP growth closely related to real oil growth. Oil exports account for more than 85% of government revenue. Affected by oil price fluctuations, the long-term situation of the Saudi economy will face risks. Saudi Arabia is struggling to control the government's dependence on oil; introducing a value-added tax in 2018 is the first step.

Saudi Arabia has three preferential trade agreements. The trade-weighted average tariff rate is 4.6%, and 136 non-tariff measures are implemented. Regulatory reforms have been undertaken to allow foreign investors to own controlling rights in companies. The financial sector is open and offers a variety of options. In 2020, measures will be taken to support the private sector, allowing banks to defer loan payments and increase loans to enterprises.

TOP 5 WEALTHIEST CITIES

POSITION

CITY

GDP PER CAPITA

1

Dhahran

209,774 Riyal 55,934.29 USD

2

Riyadh

121,395 Riyal 32,368.85 USD

Capital, urban nature, densely populated, an important financial, commercial, and

3

Khobar

121,277 Riyal 32,337.39 USD

The world's greatest oil organization "Saudi Aramco" is settled there, a built city with tall

4

Jeddah

117,272 Riyal 31,269.49 USD

5

Dammam

87,570 Riyal 23,349.73 USD

Located near the main oil discovery sites in Saudi Arabia

manufacturing center, and the second safest city.

buildings, shopping centers, and numerous roads.

Connected to the Red Sea Port, making it the largest trading center in Saudi Arabia.

Contact with the Persian Gulf, a commercial and industrial center, has abundant agricultural land and dairy products.

SOCIAL Saudi Arabia has the largest population of young people in the world. About 50% of the total population of the country is under 25 years old. 83.33% of Saudi Arabia's population live in urban areas. The capital, Riyadh, is the largest, with a population of 6,506,700, and the second-largest city is Jeddah with 3,976,400 citizens. The sacred city of Mecca, as well as Medina, Hofuf, and Ta'if all have populations between one and two million. About 60% of the country’s total population is native Arab, 9.7% are Syrians, and 7.8% are Indians. Arabic is the official language and national language of the country. Islam is the state religion.

The population of Saudi Arabia is traditionally based on the principle of patrilineal blood, superimposed on the administrative organization centered on the royal family. The principle of kinship is universal in Saudi society, and the extended family is a powerful social unit. Local affairs are often dominated and managed by a few families, leading to obvious social stratification in cities. With the development of the oil industry, wealth and material status gained additional social value.

Saudi Arabia is a highly religious society. The cultural setting is Arab and Muslim. To preserve the country’s purely religious stance, many proscriptions of behavior and dress are enforced. In public, women must wear the Hijab to cover all parts below the neck, except for hands and feet. Alcoholic beverages are prohibited. Theatres and public exhibitions of films were banned in the 1980s. However, as part of a series of economic and social reforms implemented by Crown Prince Mohammed bin Salman, this ban on theatres was reversed in 2018.

The educated Saudis know well the issues of the Arab world, the Muslim world, and the whole world, but they discourage the public from expressing opinions on domestic affairs. No political parties or trade unions provide public forums. Therefore, it is crucial to familiarize Saudi Arabia's traditions, customs, and strict observances of the Islamic faith of the country to ensure that operating and branding do not unintentionally offend local norms and practices.

TECHNOLOGICAL Saudi Arabia is the largest Information and Communications Technology (ICT) market in the Middle East, and its telecommunications and information technology industries account for 55% and 51% of the entire Middle East market, respectively. The country’s government is working hard to establish a strong and cutting-edge digital architecture to accelerate digital transformation. The strategy of the Ministry of Communications and Information Technology for 2019-2023 aims to increase the IT sector by 50% and increase the Saudi IT workforce to 50% by 2023. It also aims to attract foreign investments and support empowerment and more participation of women in the sector. Currently, Saudi Arabia has launched a 20-year ICT program that will support the widespread adoption of technology and telecommunications across its households and businesses. The combination of deregulation and massive public investment creates investment opportunities for the private sector.

The National Transformation Program (NTP) plans to invest US$4 billion in ICT programs in the next five years. Important growth areas include cybersecurity, smart grids, and command/control of major infrastructure that utilizes geospatial IT systems. Saudi Arabia's ambitious plan to expand and upgrade its infrastructure may provide significant opportunities for companies. In addition to light rail and heavy rail, Saudi Arabia seeks to expand multimodal transport between sea, bus, rail, and air services.

ENVIRONMENTAL With the exception of Asir Province on the west coast, Saudi Arabia has a desert climate with extreme heat during the daytime, a sudden drop in temperature at night, and low annual rainfall. Due to the influence of the subtropical high-pressure system, the temperature and humidity vary greatly. Two main differences in the climate of Saudi Arabia can be felt between coastal and inland areas.

The average temperature in summer is about 113°F, but it is not uncommon to reach 129.2°F. Soon after sunrise, the heat became intense and continued until sunset, followed by cool nights. In winter, the temperature rarely drops below 32° F, but there is almost no humidity and high wind chill, making a quite cold atmosphere. The climate is mild in spring and autumn, with an average temperature of around 84.2°C. The Asir area along the west coast is affected by the Indian Ocean monsoon, which usually occurs between October and March. The average rainfall during this period was 300 millimeters, accounting for about 60% of the annual rainfall. For the rest of the country, rainfall is very low and unstable. The annual rainfall may include one or two local heavy rains or thunderstorms.

Shifting sand dunes and dust storms are serious natural disasters faced by cities in central and eastern Saudi Arabia.

Flash floods, occasional seismic events, and dust storms are the main natural disasters in Saudi Arabia.

LEGAL Saudi Arabia's judicial system is based on Islamic law (Shari'ah) in criminal and civil cases. At the top of the legal system is the King, who is the court of final appeal and the source of pardons.

The largest is the Shari'ah court, which hears most cases in the Saudi legal system. Shari'ah courts are divided into several categories: Courts of the First Instance (Summary and General Courts), Courts of Cassation, and the Supreme Judicial Council. Supplementing the Shari'ah is the Board of Grievances, which hears cases involving the government. The third part of the Saudi court system is composed of various committees within government ministries, responsible for handling specific disputes, such as labor issues.

This year 2021, Saudi Arabia announced new judicial reforms, which put the country on the road of codification. It will also improve the reliability of procedures and supervision mechanisms as the cornerstone for realizing the principles of justice and clarifying the boundaries of accountability.

The crown prince announced the latest in a series of major economic and social reforms aimed at modernizing the kingdom. It is in line with his Vision 2030 agenda, which aims to diversify the economy away from oil and attract foreign talent and investment, and it comes at a time when Saudi Arabia is positioning itself as a destination for international business headquarters.

SUGGESTION FOR EXPANSION Although exporters and companies do not need to appoint local Saudi agents or distributors to sell products, it is recommended that new companies entering the market consider partnering with a local company to monitor business opportunities, navigate imports and standards test regulations, and determine public sector sales and contract opportunities.

Some additional challenges: The Saudi Arabian government has increased the local content requirements for foreign companies, for example, strongly encouraging the purchase of goods and services from local supplier bases. And the quota for hiring Saudi nationals is getting stricter. US companies report, it is increasingly difficult to obtain visas for expatriate professional employees. Therefore, companies may also face challenges in finding enough qualified Saudi nationals to fill jobs.

MARKET ANALYSIS BEAUTY AND PERSONAL CARE MARKET The Saudi Arabia perfume market is expected to have a compound annual growth rate (CAGR) of 7.1% until 2024, which will reach a $2.64 billion value. Compared to Western countries, Saudis outspend them by ten-fold with fragrance, makeup, and skincare. On average, they spend over $700 a month on oriental fragrances and essential oils, and $500 a month on western fragrances, making them one of the world's highest spenders on perfume.

International manufacturers are recognizing the high demand, which is attracting newto-the-market brands. Additionally, they have a better success rate if they cater their products specifically to Saudi preferences. Traditional or local perfumeries are expanding their product lines to create exclusive and customize perfumes to satisfy the demand for all-natural, hand-crafted scents.

PREMIUM MEN'S FRAGRANCE

-15.2%

-8.2

9.2% 643.4

PREMIUM WOMEN'S FRAGRANCES

PREMIUM FRAGRANCE STATISTICS -17.2%

-6.9%

8.2%

Interestingly, Saudi Arabia has the highest amount of premium perfume sales within the unisex fragrance market. Byredo falls in the category since its scents are niche and conform to no gender. Fragrance kits and sets are not doing well and only account for a small percentage of sales (Figure 5).

950.0 PREMIUM UNISEX FRAGRANCES

-20%

Because of Covid-19, the premium fragrance market retail value declined in 2020, valuing at 4,624 million Saudi Riyal (SAR) equivalent

-4.5%

8.5% 2867.9

to $1,232,952.56. (Figure 6) However, it is forecasted to have a comeback that is far greater than it was since 2006. Similarly, because of the global pandemic, 2020 saw a -16.1% decline in year-over-year retail value. 2021 is predicted to have a large increased demand spike and then decline and neutralize from 2022 to 2025 (Figure 7).

PREMIUM FRAGRANCE SETS/KITS

-15.7%

-3.8%

10.2% 163.1

-40%

20%

CURRENT YEAR GROWTH

0%

20%

CAGR 2015-2020

40% CAGR 2020-2025

Figure 5 | Premium Fragrances by Category | 2020 | Passport

Figure 6 | Sales of Premium Fragrances | 2020 | Passport

13.7%

12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25

10.1%

20

10.8%

11

20

10

20

10% 12.2%

09

15%

20

08

0

20

2,500

07

7344.1

6644.8

6077.0

5619.1

5623.2

4624.3

5513.0

5621.2

5627.5

6051.6

6081.0

6123.7

5256.0

4610.8

4014.5

3618.4

3286.3

2965.6

2607.7

2324.1

5,000

20

06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25

20

7,500 20% 14.9%

0%

-10%

-20%

16.5% 13.8%

14.0%

10.9% 10.5%

8.1%

5% 6.8%

-0.5% -0.1%

-0.7%

Figure 7 | Sales Performance of Premium Fragrances | 2020 | Passport

9.3%

-1.9%

-5% -7.0%

-15% -16.1%

Saudi Arabia Luxury Market KEY PLAYERS

Market Share by Category (%)

DIRECT COMPETITORS The main products of Byredo can be separated into premium fragrance and premium beauty and personal care, the key players of these two areas in Saudi Arabia are Arabian Oud and AI Qurashi, which belong to Arabian Oud

Others 7.7% Food and Drinks 7.7%

Co, and Abdul Samad AI Qurashi Co. These two brands have seized a large part of the market share in Saudi Arabia. Besides, Dior and AI-Majed for Qud, and Make Up For Ever and BeneFit are also competitive key players within the premium fragrance market and premium beauty and personal care in Saudi Arabia.

Personal Luxury Goods 11.5%

Travel and Hotel 53.8%

INDIRECT COMPETITORS According to Expert Market Research, based on the category, the Saudi Arabia luxury market can be divided into Travel and Hotel, Cars, Personal Luxury Goods, Food and Drinks, and Others. Among them, the indirect competitive areas of Byredo would be premium hospitality and the luxury restaurant industry.

Cars 19.2%

Abdul Samad Al Qurashi

Arabian Oud

Parfums Christian Dior

The house of Abdul Samad Al Qurashi is one of the finest producers of

Founded in 1982, Arabian Oud is the largest fragrance manufacturer and

Christian Dior described himself as a fashion and perfume designer. The

Arabian Perfumes, it has its roots more than 150 years ago, with a family

retailer that specializes in incense, oriental perfumes, and oil perfumes.

House of Dior, founded in 1946, made a revolutionary look that changed

specialty in oud fragrances and incense. Started in 1852 by Abdul Samad

Being the Scent of Luxury, Arabian Oud is a prominent and trusted name

the face of ladies’ style forever, and it was accompanied by a fragrance,

Al Qurashi, it has become one of the best perfume producers in the

with over 30 years of expertise in the production of authentic scents.

Miss Dior, the finishing touch designed to “leave a trail of desire in a

world. Abdul Samad Al Quarashi founded the perfumery that bears his

Arabian Oud strives for perfection and aims to spread Eastern Culture

woman’s wake”. The classic and timeless perfume was the first fragrance

name, and the legacy has been continued by his sons. Each son began

and Great heritage embodied in Arabian perfumes throughout the entire

created by Dior that invented the concept of global beauty with its

with his own perfume shop, and the business has grown today to

world. They travel the world from east to west trying to find rare

subsequent cosmetic lines. Currently, the trustees of this legendary

encompass more than 500 stores throughout the world. The company

fragrances that no one has discovered, and with intense experiences

expertise are – François Demachy, Dior Perfumer-Creator, and Peter

is headquartered in Makkah, Kingdom of Saudi Arabia.

that they gained many years, they introduce a signature fragrance that is

Philips, creative and image director of Christian Dior make-up – are the

unique to Arabian Oud. Currently, Arabian Oud has 800 branches in

heirs to Christian Dior’s perfectionism. From Grasse to Paris to the Dior

over 150 cities and 35 countries worldwide, from London to Paris and all

Gardens, Parfums Christian Dior enhances the most beautiful

across the Middle East with a dedication to quality and perfection in the

ingredients so that each of its creations helps shape its global aura.

art of perfumery.

Price Range: $2.25 - $1,200

PRICE RANGE: $ 50 - $ 1,500

Price Range: $26 - $210

AI-Majed for Qud

MAKE UP FOR EVER

BeneFit

Al Majed Oud is a brand that is characterized by perfumes, lute, and

Founded in 1984, a collective of makeup artists co-created MAKE UP

Founded in 1976, famous for its brow products, BeneFit is a beauty brand

incense of all kinds and their distinctive smells and prices. Since 1956, Al

FOR EVER with high-performance products and services. The brand has

that has swept the world with one-of-a-kind cult-favorite products like

Majed for Oud has been working on creating a promised market in the

been collaborating with professional makeup artists to stay at the

Benetint, BADgal BANG Mascara, the POREfessional Face Primer, Hoola

field of trading of Oud through the whole trading sector. They acquire

cutting-edge of technological, formalistic, and artistic advances while

Bronzer, Precisely, My Brow Pencil, and Gimme Brow+. BeneFit is one of

more than 60 years of experience in the manufacture of Oud and

offering everyone access to all products and benefits. MAKE UP FOR

the fastest-growing prestige beauty brands in the business with

perfumes across from the gulf market. By construction and innovation,

EVER has various makeup products which include face, eyes, and lips

locations in 59 countries across 5 continents. With more than 3,000

new perfume lines participated in expanding the base of customers and

products.

BrowBars with over 6,000 aestheticians worldwide, Benefit is part of the

moving towards retail trading and it reached 165 sales platforms in the

world’s leading luxury products group, Louis Vuitton Moet Hennessy.

Kingdom of Saudi Arabia and the Gulf countries.

Price Range: 1٬266٫00.‫س‬.‫ ر‬- 24٫00.‫س‬.‫ر‬

Price Range: $5 - $110

Price Range: $15 - $61+

target customers

DEMOGRAPHIC PSYCHOGRAPHIC BEHAVIORAL PERSONA

Byredo embraces consumers from all levels.

The section focuses on Saudi Arabia's consumer profile.

65 < 3.3%

DEMOGRAPHIC

0-14 24.4%

With 35 million inhabitants, Saudi Arabia accounts for 0.45% of the world’s population. The country has a 1.6% population increase rate per year. In 2020, 24.4% of the population were in the 0-14 age group, and 72.3% fell into the 15-64 age group; the rest is over 65-year-old. The median age was 31.8 years old in 2020. Within the population, women account for 42.2% of the total population. Almost 100% of Saudi Arabians are Muslim, including 85-90% Sunni and 10-15% Shia. With wide access to education, 92.7% of women and 97.1% of Saudi men know how to read

15-64 72.3%

and write. The official language of the country is Arabic. Although most women receive a high level of education, they still suffer gender inequality; women account for only 15% of the labor force in Saudi Arabia, according to the World Bank in 2019. Nevertheless, Saudi Arabia still had $55,944 of GDP per capita in 2019.

LIFESTYLE / PSYCHOGRAPHIC

POPULATION COMPOSITION BY AGE (2020)

According to the CIA World Factbook, around 84% of the people will live in urban areas (Riyadh, Jeddah, Mecca, and Medina) in 2020. Over two-thirds of the people living in Saudi Arabia work for jobs related to services, while the rest of the jobs are industrial- and agricultural-related. As for leisure activities, the survey from Passport showcased that 25% of consumers in Saudi Arabia prefer nature and outdoor activities, followed by 19% of the consumers who enjoy shopping and 12% of the people who tend to participate in events related to arts and heritage. The top three factors that influence consumers’ decision on activity destinations include relaxation, security concerns, and a familyoriented or child-friendly environment.

POPULATION COMPOSITION BY GENDER

BEHAVIORAL INFORMATION

TECHNOLOGY USAGE AND MEDIA CONSUMED Saudi Arabia has a high percentage of internet usage, around 95.72% of the total population. 79.25% of people are active on social media. They spend an average of 7 hours and 45 minutes per day on the internet while social networks contribute 3 hours and 6 minutes. Almost 90% of internet users in the country adopt Youtube, followed by 76.4% of Instagram users and 73.9% of Facebook users. As for communication, around 80% of them use WhatsApp; Facebook messenger users account for 54.1% and 53.% of Snapchat users. Interestingly, 64.6% of social media advertising audiences are male users.

SHOPPING HABITS 58% of consumers from the Passport survey go shopping for leisure, and 50% like to visit shopping malls. Worth noting that 40% of them mentioned they would instead buy fewer but high-quality products. With 34% of survey participants seeking out niche brands that are hard-to-find or unique, 69% of them show their willingness to return to shopping malls as retailers offer customers engaging experiences. In addition, 39% of consumers shopping in a physical store are for immediate purchase, while 38% of consumers prefer seeing or trying products before purchasing. According to McKinsey & Company, consumers in Saudi Arabia shopping at a new brand or retailer are for better prices and promotions.

LUXURY SHOPPING HABITS As for luxury shopping, affluent shoppers tend to take the journey split into four parts: research, shortlisting, reassurance, and purchasing. When it comes to researching what items to purchase, most shoppers tend to look at brands’ websites first, then social media platforms. The factors influencing luxury shoppers’ decisions when purchasing include the brand’s identity, price, and country of origin. The brand’s availability in Saudi Arabia also played an essential role. Most luxury shoppers are reluctant to purchase high-end goods online. While the research, shortlisting, and reassurance stages all take place online, consumers still prefer buying items in bricks-and-mortar.

They value the attention, care, and services they receive in stores, and those are the reasons to keep them coming back.

PERSONA 1 SAJA NADIR SROUR, 26

KINGDOM OF SAUDI ARABIA

SINGLE

TAIBAH UNIVERSITY THE OWNER OF A LOCAL EVENT PLANNING STARTUP

HIGH-QUALITY AND EXCLUSIVE PRODUCTS PRICE SOMETIMES AFFECTS DECISIONS OMNICHANNEL SYSTEM

$80,000 USD

SHOPPING HANGING OUT WITH FRIENDS

4 HRS / DAY ON SOCIAL MEDIA

I LOVE UNIQUE SCENTS WHICH CAN REPRESENT MY PERSONALITY

PERSONA 2 RUBADAH SHAWQ KANAAN, 64

KINGDOM OF SAUDI ARABIA MARRIED WITH 5 CHILDREN AND 7 GRANDCHILDREN N/A

HIGH-QUALITY PRODUCTS ENJOYS PURSUING TRENDS

HOUSEWIFE

PREFERS SHOPPING MALLS

N/A

OUTDOOR ACTIVES WEEKLY TRADITIONAL MARKETS 3 TIMES A WEEK

2 HRS / DAY ON SMARTPHONE

I LOVE CLASSIC SCENTS FROM FAMOUS BRANDS BUT NEW SCENTS AND PRODUCTS ARE APPEALING TOO

PERSONA 3 ANAND SHEVADE, 35

INDIA

MARRIED WITH 2 CHILDREN

ALFAISAL UNIVERSITY

APPEARANCE IS A PRIORITY HIGH-TECH PRODUCTS

MANAGER IN A REAL ESTATE COMPANY

UNIQUE CUSTOMER EXPERIENCES

$120,000 USD

OUTDOOR ACTIVES WEEKLY FOOTBALL WITH FRIENDS TWICE A WEEK

2 HRS / DAY ON SOCIAL MEDIA

I LOVE WEARING MATURE, GENDERNEUTRAL, AND EXCLUSIVE SCENTS

PERSONA 4 SIRAJ AL DIN ATA GANEM, 70

KINGDOM OF SAUDI ARABIA

WIDOWER WITH 6 CHILDREN

KING SAUD UNIVERSITY RETIRED IN 2010 PREVIOUS OCCUPATION WAS A DOCTOR

SELDOM SHOPPING HIGH-QUALITY PRODUCTS

N/A RELIGIOUS ACTIVITIES WEEKLY READING BOOKS TRAVELING N/A

I HAVE SOME FAVORITE SCENTS I PREFER SCENTS THAT CAN ELICIT MEMORIES RELATED TO MY WIFE

store location

TRADING AREA ANALYSIS PRIMARY EXPANSION POTENTIAL TRADING AREA AREA FACTORS & ATTRACTIONS SITE EVALUATION

TRADING AREA ANALYSIS THE LUXURY MARKET OF GCC The Gulf Cooperation Council is a political and economic alliance of six Middle Eastern countries - Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. The GCC was established in Riyadh, Saudi Arabia, in May 1981. The purpose of the GCC is to achieve unity among its members based on their common objectives and their similar political and cultural identities, which are rooted in Arab and Islamic cultures.

Although during the COVID-19 pandemic, the value of the luxury goods industry in the GCC countries has dropped to about 7.46 billion U.S. dollars in 2020, compared to the global average decline in that year of 23%, the region has fallen by 17%. And according to the IMARC Group report, the GCC personal luxury goods market has shown moderate growth during 20152020 and is expected to recover from 2021 onwards and to grow at a compound annual growth rate of about 5% during 2021-2026.

In addition, with the improvement of consumers' living standards and the increasing disposable income levels, the demand for personal luxury goods in the GCC region has increased, and modern retail stores are also expanding. Byredo has already targeted the development potential of this area and entered the Dubai Mall this year. Therefore, the Gulf Cooperation Council (GCC) region can become an active growth market for Byredo.

PRIMARY EXPANSION As our previous research on the countries showed, Saudi Arabia is a profitable place for the expansion of Byredo. And it is better to enter the Saudi Arabian market by reaching an agreement with local partners and starting operations through a franchise or a joint venture with local distributors. Due to the high disposable income in the region, priority is given to large cities and major economic centers in Saudi Arabia for retail expansion, which will help to reach more consumers and accumulate exposure.

POTENTIAL TRADING AREA The Kingdom of Saudi Arabia is divided into 6 regions with 13 provinces.

RIYADH

JEDDAH

MECCA

MEDINA

Located in the central region

Located in the Hejaz region

Located in the Hejaz region

Located in the Al-Madinah region

The largest city in Saudi Arabia

The second-largest city in Saudi Arabia

The holiest city to all Muslims

The second holiest city

The capital of Saudi Arabia

The biggest seaport in the Red Sea

Population over 2M

Prophet Muhammad's burial place

Population more than 6.5M

The population almost 4M

Tourists are 3x of its residents

Population more than 1.2M

SELECTED AREA FACTORS AND ATTRACTIONS - RIYADH With a GDP per capita of $ 32,368.87 USD, Riyadh is known as the second-richest city in Saudi Arabia, following Dhahran. While representing about 50% of the non-oil economy in Saudi Arabia, Riyadh is considered the most indispensable area for not only private but public businesses in the country. Riyadh is also the anchor of Saudi’s government, hosting many government ministries and public services headquarters, which results in the public sector being the city’s largest employer. The city has a high density, full of shopping centers, offices, educational institutes, luxury hotels, restaurants, etc. Importantly, religion is reckoned a requisite for most inhabitants living in the city, making hundreds of mosques established. Worth noting that the city has two most recognizable mixed-use skyscrapers: Al-Faisaliah center and Kingdom Centre Tower. Having various attractions, Riyadh is capable of appealing to over 5M tourists yearly. As for the future of Riyadh, with a $220B investment over the next ten years in developing Riyadh, Saudi Arabia is striving to make the city one of the world’s biggest ten cities by 2030.

SITE EVALUATION KINGDOM CENTRE MALL INTRODUCTION Completed in 2002, Kingdom Centre is the tallest tower in Riyadh, Saudi Arabia, the fifth-tallest skyscraper in the country, and the third-tallest building in the world, after the Shanghai World Financial Center and the 85 Sky Tower in Taiwan. The height of the building is 302.3 m/992 ft.

DESIGN The tower was developed by Prince Al-Waleed bin Talal and designed by the Ellerbe Becket and Omrania, who were selected through an international design competition. The building consists of a tower and a podium. The podium consists of two symmetrical wings and has 41 floors in total. From the bottom to the top, there are offices on 13 floors, ten stories of hotel, five stories of luxury apartments, and additional office space at the top. It is placed on a 100,000–square-metre site and houses the 57,000-square-meter Al-Mamlaka shopping mall, offices, the Four Seasons Hotel Riyadh, and luxury apartments. On the top of the tower is an inverted parabolic arch topped by a 300-ton public sky bridge, which takes the form of an enclosed corridor with windows on both sides.

AI-MAMLAKA SHOPPING MALL The Al-Mamlaka shopping mall is on the East Wing of the podium, which features more than 150 stores targeting three different target groups: young people, women, and luxury shoppers. This shopping mall provides a variety of products: Jewelry & Watches, Fashion, Accessories, Beauty and fragrances, Home, Travel, and so on. The luxury brand includes Avanti, Burberry, Carolina Herera, Cartier, Chanel, Chaumet, Chopard, Dior, Dolce Gabbana, Dunhill, Etoile, Etro, Fendi, Givenchy, and so on. Also, there are many bakeries & coffee shops, luxurious restaurants, as well as many food courts. For entertainment, The AI-Mamlaka is known for its sky bridge, customers will take two elevators to the SkyBridge, the first one will take about 50 seconds to reach the height of 180 meters to the Transfer level, and the second elevator will take less than 40 seconds to reach its final destination the Sky Bridge. Additionally, It has Vox VIP cinema, which provides comfortable cinema seats, a special VIP lounge, and a waiter service where call buttons on the seat can be used to order food and beverages to be delivered during movie screenings. Kingdom Centre also provides visitors with a valet parking service.

PRODUCT PLAN

60%

20%

10%

10%

PERFUME

MAKEUP

HAND & BODY CARE

ACCESSORIES

store design

MOODBOARD FLOOR PLAN RENDERINGS FIVE SENSES

MOODBOARD Byredo's Saudi Arabia pop-up store balances the juxtaposition of Arabian traditional interiors and Byredo's minimal aesthetic. In every location, the brand honors the culture by incorporating elements from it into its interiors. For example, the Dallas, Texas store has upholstered cowhide furniture.

To maintain brand identity and connect with the customer's demographic, the pop-up store will incorporate a regal and luxurious feel through gold and purple elements. In Islamic mosques round, gold chandeliers adorn the ceiling. Byredo will relate to this by installing a modern circular chandelier as a statement to the store.

Below it, a seating area will be upholstered in purple velvet. Purple symbolizes royalty and spirituality and will subtly connect with the culture. Oud-colored wooden shelves will hold the products, which upholds the brand identity and associates with oud trees that create luxurious fragrances in Saudi Arabia. Two trees will be towards the front of the store to add warmth and also cater to Byredo's design aesthetic of planting potted trees in their stores.

FLOOR PLAN

STORE SHAPE The space is 1,000 sq ft, which is typical for a

ENTERANCE

boutique store in a mall. The back wall is slightly curved since the building is curved. The room tapers toward the front.

KINGDOM CENTRE FLOOR PLAN

The Kingdom Center Business Floor Plan

Based on the business and hotel floor plan, one can assume that the mall store floor plan will mimic this layout.

The Kingdom Center Hotel Floor Plan

Traffic Flow

PLANTS Byredo has plants in its stores. Two will frame the windows.

SUNGLASSES Saudis regularly wear sunglasses and may be the only category in byproducts that will be successful in this region.

BODY CARE With the heat, body care products are in high demand. This section complements the fragrances and will be placed next to it.

MAKEUP Byredo always displays makeup in glass cases. It will be in the back since it is a staple and central pillar.

PERFUME It will be displayed along the back wall on the checkout counter. Customers will try fragrances with an associate nearby.

PLANTS Byredo has plants in its stores. Two will frame the windows.

HOLDER ACCESSORIES As a less popular item, it will be displayed in the front to increase interest and consumption.

COLORED FRAGRANCES The colorful bottles will attract attention, and customers will immediately know that it sells fragrance.

SEATING Two purple benches face back-to-back to creating an inviting atmosphere. A large gold chandelier will hang above it.

CANDLES A core section will belong in the back. It also complements the perfumes.

Saudi Arabia Store Entrance | Rendered by Caitlin Webber | Designed by Cassidy Webber

Saudi Arabia Store Interior | Rendered by Caitlin Webber | Designed by Cassidy Webber

Saudi Arabia Front Desk Perspective | Rendered by Caitlin Webber | Designed by Cassidy Webber

MERCHANDISE MIX Byredo's Suadi Arabia pop-up store will display products similar to all their other stores. Items will be organized and neatly aligned in rows. Its stark white packaging will sit below and above the shelves that display the product.

The goods on display will be testers, which will encourage customers to try, test, smell, and swatch creating a poly-sensual experience.

Byredo Hong Kong, China Store

Byredo Pop-up Store in Paris: Eleventh Hour

SAFETY AND SECURITY The Kingdom Tower Mall opens at 9:30 am and closes at 10:30 pm. Once closed, the shop will be barred to protect against theft. Mall security will guard stores at night and in the morning. Additionally, during the coronavirus pandemic, every shopping mall’s priority is to protect the health and safety of employees, consumers, and business partners. Our Byredo pop-up store will also keep complying with social distance, also, we will have people to measure customers’ temperature and provide disinfection products, and will follow the Kingdom Centre guidelines.

promotional strategy

PHYSICAL CHANNELS DIGITAL CHANNELS PROMOTIONAL TIMELINE

PHYSICAL CHANNELS

OPENING CELEBRATION The opening celebration will take place on February 4th, 2022, which is a Friday night. This date will cater to celebrities' schedules so most can attend. Also, this gives time for customers to purchase goods before Valentine's Day. GRAND OPENING EVENING EVENT At the event, catering services will serve food and beverages such as Ma’amoul, Basbousa, and Baklava. Despite the celebration lasting all day, celebrities will appear between 6 pm to 8 pm for photos and autographs. Only the Kingdom Centre mall VIPs will be able to attend the exclusive meeting with the influencers.

INVITATIONS Byredo will send personal invitations to celebrities on November 1st, 2021, so guests can schedule and prepare in advance. On January 1st, 2022, a private email will be sent to the special guests as a reminder to attend the celebration. The celebrities invited are the Saudi Arabia social media influencers that will promote Byredo's new store online.

IN-STORE SPECIALTY EVENTS Four in-store events will take place in the year. Each event will happen on a dedicated month, and guests will be notified in-store about the events, also via email. For instance, on Saturdays, the public will have access to the event but will need to pay a fee, while on Sundays, VIPs will have an exclusive experience.

The first event will take place on April 2nd and 3rd to celebrate the start of Ramadan. On this day, consumers will be able to create their personalized fragrance for a fee of $1,000. They will have exclusive one-on-one time with a master perfume to create their unique scent.

Meanwhile, the second perfume workshop will be hosted on October 22nd and 23rd, which is the weekend of the start of the Riyadh Season Festival.

The other event will take place on July 30 and July 31st to honor the Muslim new year in Saudi Arabia. During the event, a professional makeup artist will use Byredo products for personal makeovers for consumers. To attend this event, consumers need to pay a fee of $300. The last event of the year will take place on December 31st and January 1st to celebrate New Year.

OUTDOOR ADS The only outdoor ads that will market and promote the pop-up store will be in the Kingdom Centre mall. Byredo does not spend much on advertisements, especially traditional ads, so posters will be minimal. The ads will be on display in January to promote the future launch and in February to direct traffic to the store.

DIGITAL CHANNELS

SOCIAL MEDIA POSTS In the pre-launch, Byredo will post on Instagram and Facebook announcing the launch of their new pop-up store that will be open on February 4th. On February 1st, Byredo will post once about the opening event. Another post will promote the April and July special instore events.

PRESS PUBLICATIONS The new pop-up shop will be featured in digital press articles from Business of Fashion (BOF), Vogue Arabia, and Bazaar Arabia. BOF will post about the new pop-up store location in November. Other publications will release press after it launched and will show detailed photos of the store's interior.

EMAIL MARKETING Once a month newsletters will be sent out to Byredo subscribers to update them about special events, product releases, and brand activities.

SOCIAL MEDIA INFLUENCERS

Noha Nabil (@nohastyleicon)

Dyler (@dyl3r)

Yara Alnamlah (@yaralnamlah)

CONTENT: Beauty, Fashion, Lifestyle

CONTENT: Entertainment Artist

CONTENT: Beauty & Fashion

FOLLOWERS: 9.42M

FOLLOWERS: 2M

FOLLOWERS: 1M

ENGAGEMENT RATE: 0.24%

ENGAGEMENT RATE: 4.1%

ENGAGEMENT RATE: 0.74%

AVG. LIKES: 21K

AVG. LIKES: 110K

AVG. LIKES: 9K

AVG. COMMENTS: 480

AVG. COMMENTS: 3K

AVG. COMMENTS: 234

POTENTIAL GROWTH: +1,895 followers /day

POTENTIAL GROWTH: +2,639 followers /day

POTENTIAL GROWTH: +801 followers /day

PROMOTIONAL TIMELINE Byredo's Saudi Arabia pop-up shop will open in February 2022, one month before spring, so customers can familiarize themselves with the products and save for summer goods like sunglasses and summer scents. The prelaunch will take place three months in advance for Byredo to prepare and promote the new location on various media. After a month from any activities, Byredo will host a custom fragrance workshop, which will be promoted via social media and email by both Byredo and selected influencers. In July, Byredo will host another special in-store event, a makeup event, to encourage foot traffic further. Finally, to cater to Saudi Arabia's Riyadh Festival, the shop will host these same two events in October and January.

financial plan

INCOME STATEMENT SALES FORECAST EXPENSES OF PROMOTIONAL ACTIVITIES EXPENSES IN DETAIL

*Average Markup - 90%

SALES FORECAST To calculate sales, population data for Riyadh as well as tourist foot traffic reports were used. Since the Kingdom Centre is one of the most prominent attractions in the city, 80% of the population will visit the building at least once a month. Especially during the Season Festival, higher footfall is expected. However, only 30% will most likely visit the Byredo store. Depending on special events, workshops, and holidays, the conversion rate will fluctuate; also, it can be predicted that people will spend more during these periods. It is also assumed that Byredo has an average markup of 90%, which affects revenue and the cost of goods sold.

EXPENSES OF PROMOTIONAL ACTIVITIES Since Byredo will be posting social media and sending emails, the cost will be $0. However, the brand will pay influencers $2,000 for each Instagram post. In January, two influencers will promote the opening pop-up shop, while in February, all three will post to market the grand opening. Considering food, beverage, and influencers, the opening celebration will be the highest cost. The cost of food is $650, and influencers will be paid $10,000 each. Lastly, the outdoor ads will be featured three weeks in January and two weeks in February on the weekends, totaling $2,500.

EXPENSES IN DETAIL

INCOME STATEMENT

EXECUTIVE SUMMARY In summary, Byredo will fulfill its mission to translate memories and emotions into products and experiences by expanding into Saudi Arabia. After analyzing the brand's current situation, distribution channels, and market strategy, Byredo expanding into Saudi Arabia will increase its brand's awareness and satisfy the strong market demand for premium products. The Saudi Arabian market's high GDP and consumer shopping behaviors show promising profits and acceptance of the unique, gender-neutral brand. Despite the Arabian roots in traditional oud fragrances, there is a growing demand for experiential stimulation, and high-quality luxury niche products are expected to reinforce the brand's status further. However, the store plan will act as a bridge connecting rich Arabian culture with the modern and simplistic Byredo identity. Once the pop-up shop opens, Byredo will reinforce a multi-sensory shopping experience through events, workshops, and services. As a result, the new store will be the first step into penetrating the market and acquiring a new customer base by intertwining memories and emotions with Saudi culture.

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