Dubai, UAE— Every year Eiman Almansoori sets aside $13,614 for her annual purchase of luxury items. She splurges the money on handbags, cologne, and personal care products from high-end Western designer labels.
In recent years though, she has found herself being drawn to the local Arab luxury brands like Emirates Pride and Feathers Fashion UAE.
“I’ve had different experiences in different product categories. I trust Emirati brands in fragrances, while Kuwaiti brands are very fashion forward, and I’m quite fond of Bahraini handbag brands. Each country has a special thing to offer.”
Eiman is part of a growing band of people in the Middle East that are making a new fashion statement in the region by donning products from the local luxury brands like Aiisha, Bambah, Bouguessa, Dulce by Safiya, Madiyah Al Sharqi, Mochi, and ZayanThe Label. In fact, they are as much at home using the local designer labels as they are using the Western brands.
“They [GCC youth] seek exclusive and unique pieces that have a connection with their culture, heritage and the region. During Ramadan, for example, local designers lean into their heritage to produce coveted items that regional customers yearn for,” said Ghada Khoury, General Manager, Tryano and Saks Fifth Avenue MiddleEast at Chalhoub Group.
It is no wonder then that some 25 percent of designer labels available at Tryano are from the Middle East.
Many market experts, however, shy away from seeing the emergence of local Arab designer labels as a threat to the market dominance of Western labels in the MENA region. One of them is Anne-Laure Malauzat, a partner at Bain & Company.
According to her, the luxury goods market still remains dominated by international luxury brands, the majority of which have a strong historical foothold in the market and have tie ups with local retailing partners.
In her opinion, the customers in the GCC region have been pushing for localization even before the Covid pandemic hit the world. As a result, international luxury brands are developing products with a local touch.
Some international brands like Dolce & Gabbana have products with a local twist.
“In general, we’re seeing that classic luxury customers tend to mix and match between international luxury brands and a few local brands. So, it’s not a type of competition. I believe most customers regard them as complementary purchases rather than competition,” she told TRENDS.
In order to retain the loyalty of their patrons, the designer labels in the Middle East are employing a market strategy that has an ironical twist to it: the global designer labels are going local, while the native luxury brands are embracing international style.
“As the GCC consumers are rapidly changing and adopting global trends while maintaining their love for the region and their roots, we are witnessing a strong fusion, or glocalization. Global brands are going more local while local brands are infusing international style to cater to the latest trends,” said Forat Al Haidar, Brand Director of Ghawali.
The feverish competition among various designer labels for buyers becomes comprehensible only once one sees what is at stake for the luxury market players. According to Euromonitor International, the luxury goods market size in the MENA region is worth $29 billion in 2022, expected to reach $34 billion by 2027 at a CAGR of 3.5 percent. The UAE luxury market alone represents $13 billion, expected to touch $16 billion in 2027.
While the Covid pandemic made a big dent in others sectors of the global and the Middle Eastern economies, the luxury business in the GCC region was surprisingly very impervious to the slowdown.
According to Malauzat, the classic luxury brands were unaffected by economic challenges as people perceive them as investments, therefore they continue to buy and, in some cases, buy more of it.
“This has been a trend over the past year. For example, we saw a rise in clients from Lebanon purchasing from a few luxury brands last year because they felt it was a safe way of investing and conserving their wealth, so it wasn’t buying as a gift or anything like that, but buying as an investment.”
In Malauzat’s belief some of the top luxury companies are immune to the inflationary pressures in the GCC. “It’s polarized, so you have a few brands who are doing quite well and continue to develop, and then the lesser brands are struggling more, but that has been fairly consistent over the previous two years,” she told TRENDS.
While the demand for luxury products doesn’t seem to be affected by high inflation that much, the sector has other worries to consider. Amna Abbas, a consultant at Euromonitor International, feels that supply chain concerns are impacting the region’s luxury business, even though international and local companies are responding swiftly to match supply with demand.
She told TRENDS that this issue has pushed local luxury business partners to shift to homegrown luxury brands as a result.
“This will surely continue to lead to healthy competition. For example, when it comes to fragrances, international players such as Tom Ford Oud Wood and Jo Malone London Velvet Rose and Oud have Arabian fragrances in their product lines, while local players such as Abdul Samad and Qurashi and Arabian Oud have a strong cultural background on this with their Oud, Musks, and Bakhoor made of pure oils and continue to expand their reach beyond the region, internationally.”
The consolidation and partnership may help a few local designer labels or even Western luxury brands to tide over the crisis, but is it fair to expect local brands to compete with the high-end, wealthy brands of Europe or America. Haidar of Ghawali believes that it is time the local brands were fully exposed to the world.
“We shouldn’t forget that we’re competing with the identity and equity of global brands which have been built over decades. Thus, we must compete on all fronts. To succeed, we must communicate the brand’s value, speak the language of the shifting consumer, offer them a great product, and a personalized experience with a strong hybrid storytelling spanning across all touchpoints,” he said.
To amplify their brand appeal, technology can be a great tool for the local luxury designers to widen their customer base. Atul Hedge, an entrepreneur and a digital marketing veteran, believes the metaverse can be a great boon for the brand operators.
He says the metaverse and luxury were made for each other. “Metaverse might be the most exciting thing that happened to luxury shopping for two main reasons: it gives luxury brands a fantastic opportunity to grow in revenues, while at the same time, it is a great global marketing platform.”
Explaining the interface between the two, he cited the example of cryptocurrency being used in the UAE to buy luxury brands.
The Arab designer labels may not be in a position yet to challenge the hegemony of brands like Gucci, Louis Vuitton, or Armani, in the Middle East luxury market, but one can ill-afford to dismiss them as provincial copycats.
With a flourishing base of diehard followers scattered across the Middle East, the Arab luxury brands will continue to make inroads into the high-end designer labels market.