Gulf Cooperation Council Luxury Goods Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Gulf Cooperation Council Luxury Goods Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Gulf Cooperation Council Luxury Goods Market is poised to grow at a CAGR of 4% during the forecast period (2022-2027).

With the onset of COVID-19, players realized the disadvantages of having only brick and mortar as the sales channel; thereby, they started to strategize and diversify their distribution channels. Most players started developing their digital channels to reduce the buyer-seller gap. For instance, Industry giants like Richemont Group improved and developed its already existing digitized channel, contributing 8% to the group's sales in Q1 2020 compared to 2% in Q1 2019.

The Gulf Cooperation Council Luxury goods market is growing significantly due to heavy reliance on oil and hydrocarbon revenues. The market is further expected to grow positively owing to the proactive government complemented by the factors such as an expanding population base, high GDP per capita, and the growing tourism sector.

The emergence of e-commerce has provided consumers easy access to product-related information and prices through online sources. This factor has further contributed to the overall growth of the luxury goods market. Consumers in the Gulf Cooperation Council are highly conscious of their luxury cosmetics and fragrances choices. Hence, the companies operating in the market are working to enhance their sustainable packaging styles.

Dubai has continued to be the key regional hub for purchasing luxury goods and has stood out as a leader in retail space quality. Also, other cities in the UAE have risen in their rankings in terms of the cost of living. UAE has always been an attractive location for ex-pats. Due to the highly competitive compensation packages, falling real estate prices, high safety standards, and a healthy economy, it continues to be so. Dubai and Abu Dhabi feature among the top 10 cities globally in terms of the new retail space under construction. They also witness the highest amount of growth in terms of HNIs. Hence, UAE poses higher growth for luxury goods sales, with clothing and apparel taking the highest share of about 40% in value.

Demand for Swiss watches is growing in the UAE. The market recently saw various timepieces featuring the region's symbols.

The GCC online retail market is growing fast and is drawing huge attention from investors across the globe. Bahrain, UAE, and Qatar have the highest internet penetration rates in the world at present. None of the main reasons behind online channel purchases is consumer comfort. The rapid growth was fueled by improved product range, ease of buying, customer choice of the delivery date, and a smooth purchasing experience. Luxury fashion has developed itself in the digital world. Consumers now engage with most brands through their online stores and multi-brand e-tailers. About half of the luxury goods buyers are now swayed by what they hear or watch on the internet. From Louis Vuitton to Chanel and Gucci, luxury fashion houses have been rushing to embrace digital, whether by partnerships with multi-brand sites, like Farfetch, creating their websites, or combining the two. The shift to digital makes sense as online purchases are projected to fuel potential luxury goods demand growth. As a result, sales of brick-and-mortar retailers will decline. Some well-known online stores offering luxury products across the market include Tutus Kurniati, Goshopia, The Luxury Closet, Ounass, Tryano, Farfetch UAE, Bloomingdale’s, and Elilhaam.

The GCC luxury goods market is highly competitive, with global and domestic players. The key players are Al Tayer Group, Etoile Group, AW Rostamani Group, Alshaya franchise group, and The Estee Lauder Companies Inc. However, the global players, including Rolex SA, Roberto Cavalli SpA, LVMH, Chanel SA, Kering Group, and Compagnie Financiere Richemont SA, show dominance over the market. Companies compete on different factors, including product offerings, quality, sustainable packaging, marketing, and brand omnichannel activities, to gain a competitive advantage in the market and expand their business. The emergence of e-commerce further contributed to the overall growth of the Gulf Cooperation Council luxury goods market.

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