How to sell luxury goods in Iran. Information for companies wanting to enter the Iranian market

1. Selling Luxury Goods in Iran
Dec 2015

2. 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%

3. SMALL TARGET FOR LUXURY
C
D/E
Total popula,on is 78mln
10% A&B Class
Average monthly income
+7K USD
4.2K USD
2.5K USD
1000 USD
400 USD
1%
3%
6%
55%
35%
A+
A
B

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

5. 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:

6. 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
Simple style Flashy
High brand
awareness
Have heritage
Came up
from C&D
Modest and chic
Beauty surgery
No proper
style
OLD RICHES NEW RICHES
Use of
cosme@cs
Imita@on
LUXURY USERS – A+/A Class

7. 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

8. 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

9. BRANDS RUSHING TO IRAN
And More…

10. 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

11. WHAT’S THE OPPORTUNITY – New Iran
Sanc@ons liMing
Q1 2016
Ease of doing
business
Increase of TG
(B) 6% to 11%
Fake & grey to
authen@c
Market growth
X2

12. BRAND BUILDING LOGICS – Main Pillars
MEDIA
STORES
EVENTS
DIRECT
LUXURY BRANDING

13. 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

14. 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

15. 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

16. 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

17. 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

18. CERTIUS
We are your partner in Iran

19. OUR PURPOSE
HELP YOU TO
Assess the business
opportunity
Establish your
business
Thrive long-term
in Iran

20. 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

21. Thanks