Inside the AI shift redefining luxury retail in the UAE

When Chalhoub Group teamed up with FACES, one of the Middle East’s top beauty retailers, to launch Layla AI, they weren’t just adding another chatbot to the mix. Layla is a generative AI–powered “personal beauty coach” built to bring the in-store consultant experience online. It guides users through a wealth of skincare, makeup, fragrance, and haircare products, drawing on decades of regional retail expertise to offer advice that feels both knowledgeable and personal.

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Layla AI speaks Arabic and English the way people actually use them, including the modern ‘Arabizi.’ That fluency has helped it connect with customers who are comfortable shopping online but still expect guidance when buying premium products. Chalhoub Group says customers that chat with the tool convert at more than twice the rate of non-AI interactions, with users spending longer on site and exploring a wider range of products. On average, shoppers using Layla spend about seven minutes more per session and view roughly 27% more items—signaling that AI-led guidance is influencing depth of discovery.

Visa data shows that 41% of UAE shoppers have used AI tools to research products, while another 40% have relied on them to compare prices or find deals. Nearly three in four respondents in a survey by Visa said AI-powered tools are more likely to surface the best possible price. While Layla AI sits at the center of the beauty industry, its early performance has widened the conversation across Chalhoub Group—home to 10 owned brands and over 400 international labels—about how AI could reshape luxury shopping across the UAE, far beyond cosmetics.

“Layla is our AI beauty advisor,” Jeremy Denisty, the head of AI at Chalhoub Group, said. “At the moment, it’s only on the FACES app. Of course, we plan to make it part of other channels and eventually other brands.” Layla AI, Denisty says, is part of Chalhoub Group’s broader artificial intelligence strategy and serves as one of three core pillars in the company’s Vision 2033 plan for AI integration. He described the initiative as a long-term priority, not a short-term experiment, noting he’s spent nearly six years embedding AI strategically across the business.

Denisty says online search has barely changed in 30 years, and tools like Layla can fill a gap in the e-commerce experience. “ If you wanna start a conversation about beauty routines or advice, Layla is really the place to go when you want to have the conversation,” Denisty said. “ Imagine it as a sales advisor or beauty advisor in a boutique, except that Layla has unlimited knowledge about our entire product portfolio and has been trained with decades-worth of beauty knowledge about the region.”

Built on a generative AI model, which Denisty says started with a large language model already available on the market, the technology was designed to respond conversationally and adapt in real time to user queries. Rather than steering shoppers toward a single product, Layla helps users figure out what they actually need, offering context on ingredients, skin concerns, and product fit as shoppers move from browsing to checkout.

“[Users are] having conversations and are being able to ask the right questions, and that’s really driving people to find the products that they need and then confirm their purchases afterwards,” Denisty said. “Something you put on your skin is heavily important, right? You wouldn't buy something without the right amount of information.” When asked if it was designed to help buyers make a decision in the first place or if it is completely shifting their purchasing behavior, he said, “It’s actually both.”

Among the most common questions the AI team sees in the beauty category are whether a product is halal, information that isn’t always included in product descriptions, and whether it is safe for use during pregnancy.

“ I have to say we've been astonished by the results,” Denisty said. “We had, of course, several successful KPIs. We thought, okay, the people who interact with Layla technically should convert 20 to 30% more,” he said, meaning they expected shoppers who used the AI to be slightly more likely to complete a purchase than those who didn’t. “[Shoppers] ended up converting 260% more, so 2.6 times more than the people that were not using Layla.”

To put Layla’s performance in context, Lars Bergkvist, Clinical Associate Professor of Marketing at NYU Abu Dhabi, offers insight on consumer behavior and the impact of AI in retail. With experience with media agencies and market research across Europe, Asia, the Middle East, and Australia, Bergkvist brings a practical, global perspective to shopper behaviors.

“When it comes to consumers’ decisions, trust is key. You know, we don’t buy brands we don’t trust, we don’t buy from retailers we don’t trust,” he said. He added that whether people accept recommendations from an AI agent depends on the quality of the responses and the credibility of the tool.

Bergkvist says Layla is really just doing what shoppers already do—researching and comparing—but in a way that’s quicker and more personalized. He added a note of caution though: “It’s really easy to lose consumers’ trust, so there’s not much room for mistakes or bad recommendations.”

Denisty explained that during development, getting the language right was critical to build both efficiency and trust. “Eighty percent of our interactions with Layla are happening in Saudi Arabia, in Arabic because of the population, because of the positioning of FACES, Denisty said. “We needed that Arabic to be perfect, the right dialect spoken, the right words in the brand voice.”

On both language and content recommendations, he added, “It is deeply catered and fine-tuned for the region.” That approach, he suggests, encourages engagement. “Why I believe Layla works so well is because we do truly have very strong expertise in regional beauty knowledge. We’ve been delivering beauty products, experiences, and services for literally decades,” Denisty said.

If trust can be intelligently built into the design, Bergkvist noted that the application of the tool could go beyond just the beauty space or even luxury. “You can ask an AI to do a systematic comparison of washing machines, fridges, or whatever product you’re buying,” he said. The difference, Bergkvist said, is speed: AI pulls together comparisons across many more brands at once, rather than forcing shoppers to do it manually through Google. His point underscores that AI’s early role is not necessarily to invent new shopping behaviors but to make existing ones faster and more efficient, adding that “ AI offers a really good opportunity for highly efficient price comparison.”

Phillippa Kennedy, Account Director of Brazen Media and a veteran of the Middle East’s luxury sector, has spent years shaping marketing and media strategies for high-end beauty and fashion brands across the region. She emphasized the importance of the role of expert guides in driving consumer decisions, particularly in the beauty space. “I think what would be really interesting is specifically the [use of AI in the] beauty space, a lot of people need help,” she said. “Obviously, if you look at beauty products specifically, all of it is based on science. So you need someone with the knowledge to tell you if you have, I don’t know, X problem, you need Y as a solution.”

She noted that in stores, expert advice drives discovery and repeat business. “You see that a lot where there’s makeup counters, and they’re always busy, and people will buy repeat purchases online. But they don’t often buy a new fragrance online or new skincare online; they’ll just buy what they already know.”

While AI has shown promise in beauty, luxury fashion presents a different challenge. High-end shoppers often seek a tactile, human-led experience. The desire to touch fabrics, try on pieces, and experience the ceremony of purchasing a premium item is a huge barrier not only to AI bots working their magic but online shopping all together.

“A lot of people find enjoyment in shopping… but we can also find satisfaction if you manage to get a bargain,” Bergkvist said. “You negotiate a good price or find an expensive product at a reduced price… We feel good about ourselves. It’s like a victory or a triumph. If AI does all those things for us, where’s the personal satisfaction?” Bergkvist’s point raises an existential question for luxury retailers faced with the task of integrating AI into their businesses.

Yet AI doesn’t have to necessarily replace that experience, Kennedy argues — it can enhance it. She sees AI as an additive rather than a replacement in the retail realm, suggesting that the age-old question of whether malls will become obsolete in an online-first world is far from settled.

However, Kennedy does admit that, “There’s no way you could have a truly luxury experience only online.” Instead, to justify high prices, AI can be used to make things more seamless for customers, she explained. Ultimately, like many leading the charge at Chalhoub Group, Kennedy sees AI as a way to add value to businesses, not replace in-store experiences. “I don’t think it will take away from retail. It could even boost the consumer basket and maybe push up the minimum spend,” she said. AI can also shape how much people trust its guidance and what they actually buy. “For example, if I were shopping on Ounass and an item I wanted was out of stock, I could tell the AI my budget and the style or brand I’m looking for,” she added.

Denisty echoes this point: “In the vast majority of cases, I don’t think it’s replacing. There are always cases where it would be, but I think it’s a minority of the cases. I think it’s very much reinforcing our relationship and the way that we conduct our relationship with consumers, as well in-store as online.”

Chalhoub Group, Denisty says, is also working on projects to make sure that the people in stores, particularly the advisors, receive more information about the customers they’re serving using AI technology by the time they walk into a store. He envisions a future where AI can help store associates in luxury spaces provide “more human” and personalized experiences.

Bergkvist said translating the in-store luxury experience online has always been tricky, noting that this challenge isn’t unique to the AI frontier. “My initial thought was that online sales of luxury products would be impossible because the whole shopping experience is so carefully designed. You have good-looking, polite sales staff. They greet you when you enter the store. They treat you like royalty. When you buy something, they wrap it carefully in silk paper. They take out an expensive-looking bag that you can show off to everyone walking home. The whole experience is part of buying the brand,” Bergkvist said. “The experience, whether it involved AI or not, has to be designed in a way that works and fits with the brand,” he said. What might work for a brand like Okhtein may not work for a Maison like Prada.

AI can also tailor experiences to different types of shoppers. Kennedy noted that some customers like to browse and explore, while others want to get in, find what they need, and leave. Tools like Layla could make the latter experience more efficient, helping shoppers research and compare products quickly while still feeling informed. She stressed that luxury brands can’t afford to ignore the presence of the technology. Heritage Maisons that resist AI adoption risk falling behind, while early adopters can use it to enhance personalization and customer experience. “It’s not a passing trend,” Kennedy said. “If you don’t move with it, you’ll be left behind—and catching up later is always more costly.”

Beyond just shaping the shopper experience, Denisty sees AI opening real opportunities for businesses across the UAE. Tools like Layla help customers find the right products faster, spot demand they might not have known about, and give brands a chance to sell more. Kennedy, drawing on her experience in luxury and high-street retail, said it would be fascinating to see how AI could influence the number of items a consumer actually keeps. “If the tool’s going well, you should have a lower rate of returns,” she said. “If the tool’s not going well, obviously you’re going to see more returns come through, and then that’s more impact on the warehouse staff.”

The potential for AI isn’t limited to individual brands. Adoption across the region is growing fast, creating fertile ground for tools like Layla. Denisty says the UAE is leading the way, with 64% of the working-age population using AI by the end of 2025, up from 59.4% earlier in the year, according to Microsoft’s report Global AI Adoption in 2025—A Widening Digital Divide.

“There is an appetite here to innovate,” he said. “The infrastructure, the ecosystems—absolutely great,” Denisty says. He points to this as exactly why the UAE and the Gulf make such a strong testing ground for AI-powered retail tools like Layla. Kennedy agrees, noting that the UAE’s modern, relatively young retail landscape makes it open to experimentation. “I think the UAE just feels like it is a modern space,” she said. “The industry here is so new. It’s very open to being an early adopter and taking risks.”

That readiness isn’t just about adoption numbers—it’s also about giving businesses room to experiment. AI is already being applied in creative ways across retail. Kennedy pointed to examples in mass-market fashion: brands like Zara let customers virtually try on items at home. She also highlighted how AI can streamline time-consuming tasks, like updating product photos or re-shooting campaigns with models. “From a brand perspective, that’s normally really time-consuming and costly,” Kennedy said. “If AI can take that off your hands, it’s obviously a big benefit for the business...  AI can save so much time for the teams that are behind the brands and the retail spaces.”