Selling Luxury Goods in Iran

Dec 2015

LUXURY IS HERE…WHERE IS THE BUSINESS 1- Small market

•  Government in favor of modesty •  Sanctions •  Inflation > shrink of B class •  Small TG

2- Grey & Counterfeit 3- Brand building

85%

SMALL TARGET FOR LUXURY

C

D/E

Totalpopula,onis78mln10%A&BClass

Averagemonthlyincome

+7KUSD4.2KUSD

2.5KUSD

1000USD

400USD

1%3%

6%

55%

35%

A+A

B

A modern life style, despite conservative rules: •  Travels abroad •  Internet •  Satellite channels •  Imitating the trend setters

LIFESTYLE

LUXURY USERS – A+/A Class •  Population: 4% (3,120,000)

•  The economic situation didn’t affect this segment

•  Majority live in Tehran then other top 5 cities

•  Mostly luxury items purchased from abroad:

•  New collections •  Wider choices

•  Authenticity assurance

•  Right price

•  Brands:

Consists of large landowners, industrialists, financiers,

large-scale merchants, high-ranking bureaucrats,

executive officers of public and private and wealthy

entrepreneurs

•  A & A+: new riches and old riches

•  Strong brand affinity

•  Obsession with beauty (men and women)

•  Self enjoyment vs. show off

Dis@nc@on

Showoff

Simplestyle Flashy

Highbrandawareness

Haveheritage

CameupfromC&D

Modestandchic

BeautysurgeryNoproper

style

OLDRICHES NEWRICHES

Useofcosme@cs

Imita@on

LUXURY USERS – A+/A Class

MASS LUXURY USERS – B Class

•  Population: 6% (5,460,000)

•  Majority live in Tehran then come the other top 5 cities •  Reduced by recession (11% to 6%)

•  Brand affinity is still strong

•  Luxury = Quality of life and appearance •  Owned house •  Saving money •  International travel •  Decent car •  Turkish furniture •  Brand usage even some counterfeit

•  Brands

STILL CHALLENGING MARKET ENVIRONMENT

•  Estimated at $200mln i.e. 15% of Turkey

•  Authentic, Grey and Counterfeit

•  Constantly growing (even during the sanctions)

•  Number of brands almost doubled in 3 years

•  80% to 90% of luxury market is concentrated in Tehran

•  Tehran plays a benchmark role for the country

BRANDS RUSHING TO IRAN

AndMore…

IRAN CHALLENGES – High Complexities

Brand Building •  Legal and cultural restrictions •  Lack of data •  Nontransparent advertising

and media agencies

Grey & Counterfeit •  Weak copyright •  Culture of copying •  Consumers doubt authenticity

Small Market •  Small TG •  Importation restrictions

(duties & prohibitions) •  Public ideal of modesty

General Challenges •  Go to market •  HR & Labor relations •  Availability of professional

services •  Inflation

WHAT’S THE OPPORTUNITY – New Iran

Sanc@onsliMingQ12016

Easeofdoingbusiness

IncreaseofTG(B)6%to11%

Fake&greytoauthen@c

MarketgrowthX2

BRAND BUILDING LOGICS – Main Pillars

MED

IA

STORE

S

EVEN

TS

DIRE

CT

LUXURYBRANDING

BRAND BUILDING – Direct Directly addressing the TG is an effective tool in this environment •  Data base collection or exchange •  Direct mailing •  Sending gifts •  Invitations to special occasions / trainings •  Sensitivities on content and plans

BRAND BUILDING – Media •  Banned on TV •  Billboards are highly used •  Magazines are one of the major channels (including theme magazines) •  Social media – mainly Instagram – is playing a mega role

BRAND BUILDING – Stores •  Fashion brands are sold in boutiques and multi brand shops in shopping malls •  65 shopping malls under construction in Tehran! •  The rent varies from $70 to $250 / m2 + average $250 / m2 deposit •  Restrictive rules in place •  Online retailing especially on Instagram is highly promising

BRAND BUILDINGS – Events VIP events for brand launches are very common

•  Hijab and other local obligations •  Event management companies specialized in the field •  Invitation through owned or purchased data base •  Celebrities invitation

RECOMMENDATIONS

•  Come now and do it right

•  Know Iran, feel the culture, engage your target

•  Start small, be patient

•  Get a competent distributor

•  Differentiate marketing strategy between A (Luxury) & B (Mass luxury)

•  Start in Tehran then roll out to selected other cities

•  Localize marketing even for global brands

CERTIUS

We are your partner in Iran

OUR PURPOSE HELP YOU TO

Assess the business opportunity

Establish your business

Thrive long-term in Iran

WE HELP YOU TO

ASSESS

Market entry study

Opportunity sizing

Risk assessment

ESTABLISH

Market entry strategy

Go-to-market

Supply Chain

Local partners

Legal and Tax

Finance

THRIVE

Brand building

Sales & Trade Marketing

Investment, M&A

Stakeholder Relations

Human Resources

Auditing

Thanks