Introducing the FaceTory Fridge
to the United Arab Emirates
Global Expansion Report // 2019
BACKGROUND
This global expansion report was written for the MGMT 191W Business Communications class. Students were asked to choose a product they were interested in and then write a report explaining why the product should be introduced to a country of their choice. Students were asked to choose a country that they were not familiar with.
THE FACETORY FRIDGE
The FaceTory Fridge is a miniature fridge specifically designed to store skincare products to cool and prolong product shelf life. The product’s sleek design makes it luxurious while also being functional.
UNITED ARAB EMIRATES
The United Arab Emirates is a profitable country to introduce the FaceTory Fridge. With the global rise of selfie culture and social media, the sales performance of skincare products in the UAE is estimated to grow from 2.6% to 4.1% in retail value from 2019 to 2020 (Euromonitor, 2019, June 17).
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The UAE has a wealthy consumer base that can afford luxury products, with 42.5% of households having disposable income around $50,000 or higher in 2019 (Fitch Solutions Group Ltd, November 2019). After a weak economic growth in 2018, consumer confidence in the UAE has begun to recover in 2019 with forecast growth in private spending at 3.5% y- o-y for 2020 (Fitch Solutions Group Ltd., November 2019). This indicates that now is a good time to expand its operations globally to the UAE and enter its beauty and personal care
market.
Forecasted sales of skin care in the UAE
The business environment of the UAE in relation to the U.S. makes it a profitable opportunity to expand FaceTory operations. The UAE has a strong shopping culture, where shopping malls serve as a place for socializing and a major destination for tourists. In addition to having a physical presence in stores, Emirates SkyCargo launched a new e-commerce platform in October, with US online retailers being the key beneficiaries (Fitch Solution Group Ltd, November 2019). If FaceTory establishes its presence in the country’s shopping malls and enters the UAE’s online retailer markets in time, it would be able to capture.
CONSUMER ANALYSIS
The majority of females in the UAE fall between 25 to 39 years old and this female age group comprises the majority of employed females in the country (Euromonitor, 2018). Since this age group is the most employed in the female UAE population, they are likely to have more disposable income than women outside of the age group. Women in this target group start worrying about aging and look to preventative skincare products, being responsible for a large portion of skincare consumption (Euromonitor, June 2019).
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The UAE is witnessing a more holistic approach to beauty in which the emphasis is now on skincare rather than makeup (Euromonitor, 2019, October 10). This health and wellness trend is leading to higher consumption of natural or organic skincare products in the UAE (Euromonitor, June 2019). It should be in FaceTory’s best interest to acquire this new market segment during the shift in Emirati’s consumer’s perception of Skincare.
IMPLEMENTATION STRATEGY
Sephora® has a strong brand reputation and global presence within the beauty industry. The beauty retailer has 66 stores in the Middle East, with its flagship store in the Dubai Mall which is also Sephora's number one store worldwide. The high foot traffic in these stores and on their website gives FaceTory higher visibility to its customers. FaceTory would sell high volume orders to Sephora® at a wholesale price who would then sell the products in its stores and through their website. The partnership would save FaceTory the time and money it would take to open its own retail stores, as well as increase brand awareness.
The UAE has high social media penetration, making it valuable to collaborate with key Emirati beauty influencers. Influencers, particularly in the beauty industry, have dominated UAE’s advertising market. Strong influencer relation would allow FaceTory to expand its reach and gain publicity as beauty influencers fill the gap between companies and their consumers, using their followers’ trust in their opinions to bring the company customers. Huda Katan, one of UAE’s most popular influencers, used her 26million Instagram followers to launch her own cosmetic brand, Huda Beauty.