Interview with Anthony Chalhoub and Patrick Chalhoub, Co-CEOs of Chalhoub Group
The Chalhoub Group values family, professionalism, and sustainability. As one of the leading luxury retailers in the Middle East, the family-owned company knows a fair bit about overcoming adversity. After all, becoming a major player in beauty, fashion and gifts does not come easily. But decades of dealing with unsettling times and an unsettled region has seen the Chalhoub Group emerge triumphant.
With nothing but their entrepreneurial spirit and their excellent taste in luxury goods, Michel Chalhoub and his wife Widad started an incredible company 60 years ago that today employs more than 12,000 people. The couple found their mission in bringing Western luxury brands to the Middle East. They set the cornerstone to their venture by opening the first Christofle boutique in Damascus, Syria in 1955. As their business grew, so did their portfolio of brands and today the family’s name has become permanently linked to that of its partners Dior, Louis Vuitton, Christofle, Baccarat, Puig and many more.
Sixty years later, the Chalhoub Group is active in over 14 countries and manages a network of over 650 retail stores and over 125 companies, affiliates and joint ventures. The Chalhoub Group also invest vast resources in furthering industry knowledge, providing education for their employees and championing regional sustainability. The group, currently run by second generation brothers Anthony and Patrick Chalhoub, is one of the largest luxury retailers in the region and has made headlines by launching their own concept retail stores Tanagra, Level Shoe District, and soon TRYANO.
Tharawat met with Co-CEOs Anthony and Patrick at their Dubai headquarters, a superb white building that bears the family’s logo in dark blue strokes. With modesty, friendliness and a great deal of enthusiasm, the Chalhoub’s discussed their family business trajectory, sustainability in the luxury industry and why their people are their main asset.
Tumultuous History and Accelerated Growth
This year marks the 60th anniversary of the Chalhoub Group, a family business with a story to tell. Second generation brothers, Anthony and Patrick Chalhoub, are very aware of their parents’ achievement of building a legacy that stood the test of time and stands true to the family’s values. “If you look back at our history, you will find it to be one of constant adaptation and challenge,” explains Anthony, the eldest of the two brothers.
Michel and Widad Chalhoub, parents of Anthony and Patrick and founders of the business, had to move countries multiple times due to unforeseen conflicts and circumstances. They left Syria for Lebanon in the 1960s, later leaving Lebanon for Kuwait in 1975. The family settled in the U.A.E. in 1990. “We moved the business from Kuwait to the U.A.E. because of the war. It was a learning experience. We had to realign our priorities. We had to keep bouncing back and starting over.” Anthony adds, “It also required reinvention and continuous innovation, like a phoenix that keeps rising from the ashes.”
Now headquartered in Dubai, the family luxury business spans the entire Middle Eastern region as one of the most significant industry players. “We have invested in a great HQ building in the U.A.E. but continue to focus on the whole region,” says Patrick. “Looking back on our 60 years of existence, what makes us most proud is the fact that we have over 12,000 team members that all believe in our values. This is probably the result of our long-term thinking. We are not about immediate profits. We are after excellence and fostering entrepreneurial spirit. What makes our employees very proud is that they stand for something more, they belong to something bigger.”
Entrepreneurial Agility and Necessary Sacrifice
With over 650 retail stores across the region, the Group has come a long way from their beginnings as luxury good distributors. Both brothers agree that the survival and growth of their business is rooted in the family’s entrepreneurial spirit. The question is whether such a giant organisation is able to retain its here to proven agility. “It worries us. We feel the burden of responsibility for our employees and their families,” says Patrick. “But, we always operate outside of our comfort zone. Our teams are very qualified and competent so we are confident that we can deal with eventualities. We have proven this especially when times were difficult.”
True to their word, instead cutting back on costs during the economic slowdown in 2009, the company increased investment in their people and launched a retail academy for their employees. The Co-CEOs are both quick to admit that taking such risks as a family business is facilitated by the absence of outside shareholders that pressure the business for dividends. “On the other hand, in 2011 and 2012, we experienced very good years. But instead of relaxing we decided to do a stress test. We planned scenarios on how we would deal with unforeseeable circumstances. We don’t allow ourselves to get comfortable,” comments Patrick.
Despite the huge responsibility lying on their shoulders, both Patrick and Anthony are enthusiastic and relaxed when they talk about the business. But what about their own sacrifices? Anthony looks over the rim of his glasses with humorous eyes and says, “Our integration into the family business was a very natural process. We would help out during school holidays. I remember a time without computers, when we just had these huge calculators. Even back then, we lived the entrepreneurial values. We had lots to do and were always involved. It wasn’t a sacrifice, just a natural progression.”
Patrick underlines the excitement of being part of a family business that continuously progresses by reinventing itself and transforming its business model time and time again. “We transformed the business dramatically between the 1970s and 1990s. We had normal distribution relationships at the beginning, but we quickly moved on to becoming franchise partners. In 1983 we opened the first Louis Vuitton boutique in the Middle East in Kuwait. To further integrate with our partners, we began to build joint ventures such as the one with Puig in 1999 and Fendi in 2004. We are able to engage the principals behind the brands and work jointly on expansion. It suits our long-term outlook as a business and a partner of choice.”
Today the group’s activities are characterised by a variety of collaborative formats ranging from distribution to joint ventures. In 2012, concept store Level Shoe District opened in Dubai Mall. TRYANO, another Chalhoub Group-designed retail experience, will be launched in Abu Dhabi later this year. In a way, the concept stores are the clearest representation of the group’s motto: The customer comes first. “We are here to create an experience for the customer and to make our employees proud of the work they do,” says Patrick humbly.
Perceived Responsibility and Real Sustainability
Chalhoub Impact, the Chalhoub Group’s sustainable engagement strategy, was launched in 2009. The family has long geared its energies towards not only becoming industry leaders, but also towards establishing best practice standards in the field. The knowledge we build is the knowledge we share, is the theme of the soon to be launched campaign which is to promote education and sustainable action in the luxury sector. “We have been lucky many times over. The least we can do is give some luck back to others. In our society, people come from all over. We have one of the highest GDPs in the world yet, at the same time, there is high youth unemployment. There is a mismatch between what education offers and what the market requires,” explains Anthony.
As part of its social responsibility strategy, the Chalhoub Group established the Chalhoub Retail Academy that offers its employees high quality training and certified education. “The academy is for our employees. It has increased employee loyalty and makes them feel like stakeholders. They deserve the best,” Patrick adds with conviction.
Training is only one priority. The family recently issued, Luxury in the Gulf: A Sustainable Future?, a white paper on sustainability that calls to the wider luxury industry for standards in best practice. “First, there is common view that luxury stands in paradox to sustainability,” says Anthony resolutely. “Quite the contrary. Luxury is about quality, about craftsmanship, about multi-generational leadership. It is much more sustainable than many other industries that produce goods with short lifespans. If anything, the luxury industry should be the greatest advocate of sustainability!”
The Chalhoubs are confident about where their own responsibilities lie. “We know the role we must play,” states Patrick. “Our dedication is to the 12,000 members of our team, our family, our partners. We want everyone to be fully engaged in a vision that promotes sustainability through environmental responsibility, education and innovation. We try to set an example by practical means, like encouraging recycling facilities, or intellectual means, like issuing the white paper that raises necessary questions as to where the regional industry should be going and what our responsibilities are towards the consumer and environment.”
Bright Future and Proven Wisdom
Anthony and Patrick both have fully grown children, which raises the necessary question concerning the plans for the next generation. “We want the next generation to have the courage to be different. We hope we have given them moral guidelines, but they have to decide how they see the future for themselves. We hope they will keep spreading the entrepreneurial spirit. It is not so much about a target in and of itself, but about creating advantages for the family business,” explains Anthony, who is, above all, a proud father and uncle.
“We have a strong governance system,” adds Patrick pragmatically. “Our indicators are about quality not quantity. We believe that if we continue to focus on quality and our values, then we will continue to grow the business. I think profit and turnover are a means and not the end goal. This is real sustainability. The young generation can take over and decide what they want to do.”
The Chalhoub family understands the importance of family businesses and underline the importance of supporting and assisting family companies to move forward while maintaining their values. “Keep the family united. Morally and, as much as possible, physically united,” asserts Anthony. “Even if your family is half way around the world, you have to remain united!”“I agree with my brother. Union of family despite different points of view is essential. Always think about what is important, what is essential. Don’t be bothered by trivial things that have no meaning in the bigger picture.” Patrick adds, “The next generation should want it and they should deserve it. They may be better shareholders than managers. One shouldn’t insist that they take over.”
“I agree with my brother. Union of family despite different points of view is essential. Always think about what is important, what is essential. Don’t be bothered by trivial things that have no meaning in the bigger picture.” Patrick adds, “The next generation should want it and they should deserve it. They may be better shareholders than managers. One shouldn’t insist that they take over.”
As different as the brothers are in character, their union in vision and cohesion through shared values is clearly what continues to drive the Chalhoub Group into a bright future.
Tharawat Magazine, Issue 28, 2015