Middle East luxury industry grows despite volatility
The Arab world is at a crossroads on many levels, but one thing remains a constant: the luxury sector is as strong as always and the business of luxury is interesting, exciting and intriguing at the same time.
In the Gulf, economic stability and the rise of tourism – especially in the UAE – have multiplied the fortunes of the luxury sector’s stakeholders. Indeed, the purchasing power of GCC residents and brand awareness is way above the global averages. This makes the region a true land of opportunities for the luxury sector.
The big question, however, is: How does one tap into such opportunities? What is the recipe for success in the capital-rich Arab world? And what is the strategy for winning the market?
All these questions, and many more, will be answered in a two-day conference – Arab Luxury World 2015 – at the Westin Dubai Mina Seyahi on June 1-2. The second edition of the conference, organized by the Dubai-headquartered Mediaquest Corp, the publisher of TRENDS, couldn’t have come at a more appropriate time.
According to global advisory firm Bain & Co, the global luxury market was estimated to be worth $250 billion last year and was growing at an annual rate of five percent. Moreover, the consumption of luxury goods and services in the Middle East beat the global average by far, increasing by 11 percent in 2014.
International luxury brands and groups, such as LVMH and Richemont, see a huge potential in the Gulf market, which is still considered underserved due to limited retail space for premium brands.
The good news is that the GCC retail sector is set to grow by 33 percent in the next few years and plans are in place to build the Mall of the World in Dubai (with the new district estimated to cost $6.8 billion). Vendome Mall in Qatar is a $1.37 billion project, while Saudi Arabia’s Al Diriyah Mall is estimated to cost close to $1.6 billion to build.
While tourists from Asia and nearby countries constitute a major driver of the luxury retail in the GCC, especially Dubai, high-net-worth individuals in the Gulf can’t be ignored, and they need more choices to shop within the region.
The United Kingdom–based Ledbury Research said recently that buyers from Qatar, Saudi Arabia and Kuwait are among the top ten spenders in the luxury segment.
Stakeholders in the luxury industry see a huge potential in the GCC market with the opening of new malls and the rise in tourism during the run-up to events such as Dubai Expo2020 and Qatar’s FIFA World Cup in 2022.
Young buyers in the region provide another silver lining for premium brands. UK-headquartered luxury research company Euromonitor International says that there is a clear trend for the younger generation to become more interested in luxury goods, mainly because of the brand-conscious social framework that they have been brought up in.
As the digital luxury business grows, mono-brand stores may sustain their relevance due to the ‘experience’ factor, but multi-brand stores are likely to come up with innovative strategies to remain in the luxury equation.
Following the success of the 2014 edition, Arab Luxury World will continue, in 2015, to provide a knowledge-sharing platform for luxury industry partners to effectively face future challenges and improve competition by tapping the right opportunities for their brands.
Arab Luxury World 2015 is sponsored by Chalhoub Group, D3, OMD, Starcom MediaVest Group, Infiniti and Yahoo.