Luxury consumption in the Middle East has increased by 11 per cent, influenced by a recent boost in tourism flow, despite several economic weaknesses affecting the world as a whole, a Bain & Company research revealed.
The top adviser to the global luxury goods industry released its 13th edition of the Luxury Goods Worldwide Market Monitor, which highlighted top findings in the luxury industry in several key regions around the globe, including the Middle East.
“The Middle East consumer base for luxury products is rapidly growing with a relatively stable profile,” Cyrille Fabre, a Bain & Company partner and leader of the Retail & Consumer Products practice in the Middle East said.
The trend in the Middle East reflects the status of luxury markets around the globe; the company found that a slower yet steady growth is the “new normal” for the global luxury market in 2014, adjusting lower but more sustainable growth.
According to Fabre, luxury car market, especially the “supercar” segment is expected to record solid growth in the coming period.
“While the international luxury market is affected by a number of causes such as the economic slowdown, unrest in various parts of the world, and currency fluctuation, the Middle East continues to demand luxury goods,” he added.
The influx in tourism is creating an appetite for full luxury experiences, including premium transportation – such as customised super cars and yachts, luxury hotels and cruises.
On a global level, the study found that the luxury car market grew 10 per cent up from 2013, with the growth mainly driven by emerging markets. It is worth noting that while luxury vehicles reflect a certain status, personalisation of bespoke vehicles as well as after-sales services are doubling and even tripling prices of these cars, making them more iconic.
Looking at other forms of bespoke transportation, yachts bounced back to a low yet positive pace, recording only a two per cent increase in 2014. Meanwhile, private jets boasted an increase of nine per cent, led by increasing demand from emerging markets, notably Brazil.
Given the tourism influx, hotels witnessed a steadily growing demand, recording a nine per cent growth. The emerging younger luxury consumers helped inject a five per cent growth into the cruise market as they seek superior lifestyle experiences.
Despite the large focus on luxury experiences, luxury goods have not been eliminated, and continue having a sustainable presence in the markets.
In an occurrence not witnessed since 2007, high-end shoes’ growth surpassed that of leather goods, despite being relatively cheaper than other leather goods.
Luxury accessories grew four per cent in 2014, followed by apparel and hard luxury categories, Bain & Company found.
Hard luxury – luxury watches in particular – were hit by a downturn in Asia, forcing a number of brands to cut down production to avoid having a surplus.
But overall, the study recorded that the retail channel is growing internationally, representing around 30 per cent of the market. It was noted that while consumers prefer a mono-brand shopping environment in the brick and mortar segment, the preference is for a multi-brand experience when shopping online.
Bain & Company expects more significant changes within the luxury market in the coming ten years. Luxury consumers of 2025 will not only be the centre of the customer experience, but will be at the centre of luxury itself, keeping the customer in focus through the complete process, starting from ideation of luxury goods and experiences, their creation and sales.