UAE Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

UAE Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

The UAE luxury goods market was valued at USD 2,977.69 million in 2020, and it is projected to register a CAGR of 7.17% during the forecast period, 2021-2026.

As the luxury products market was mostly reliant on offline retail stores, with the onset of COVID-19, players realized the disadvantages of having only brick and mortar as their only sales channel. They started strategizing and diversifying their distribution channels. The majority of the players started developing their digital channels to reduce the buyer-seller gap. For instance, Richemont Group improved and developed its already existing digitized channel, which contributed 8% to the group's sales in Q1 2020 compared to 2% in Q1 2019.

The increasing number of wealthy in the UAE population willing to spend millions on lavish items and the booming travel and tourism sector would be driving the market extensively over the short term, post-COVID.

Due to overexposure on social media platforms and mass consumption, consumers expect personalized products or individualized care from brands. One out of every five luxury shoppers believes that customization or tailoring is essential for purchasing luxury goods.

Key Market TrendsIncreasing Tourism is Proportionately Driving the Luxury Goods Sales

The United Arab Emirates is among the most visited countries in the world, and with the support of the regulatory bodies of the country, the tourism industry is witnessing a surge. According to the data provided by the World Bank, tourism in the United Arab Emirates increased by 7.96% over the recent years. The sustained growth of the Emirati luxury goods market can be attributed to the continuing rise in the tourism industry. The travelers visiting the country are from upper-class families and often buy luxury goods from the outlets of various multinational brands. The United Arab Emirates is an economically strong market, and therefore, major multinational brands often launch their premium products earlier in this country than many others. Tourists often come across things that the United Arab Emirates is famous for, such as perfumes and leather products. For instance, the luxury goods brand, Gucci, has a product portfolio in the country that comprises more than 29 variants of perfumes. Thus, as the tourism industry continues to grow, the luxury goods market in the country is likely to grow at a healthy rate, posing significant opportunities for the players to introduce their products in the local market.

E-commerce Sales Picking Up Pace in the Sector Compared to Offline Sales

With the increasing digital adoption, e-commerce is becoming a reality, reinventing the road to purchase for customers, shaping new user interactions, disrupting business models, and creating new growth opportunities for single and multi-brand luxury goods stores in the country. As more customers move online, businesses are following suit, which led to the gradual development of the digital ecosystem. It has provided easy access to product-related information and prices to the customers, which further contributed to the overall growth of the UAE luxury goods market. In December 2020, Prada stepped up its digital campaign in the United Arab Emirates by redesigning the prada.com website, the brand's e-commerce platform and hub for editorial content. Retailers are increasingly using technologies, like augmented reality (AR), to help online customers improve their e-commerce experience. For instance, in 2020, Gucci adopted AR virtual platforms in its collaboration with Snapchat, allowing consumers to use Snapchat filters to virtually try on Gucci shoes. The Gucci/Snapchat campaign highlights the potential of AR for different e-commerce applications, and it is available in the United Arab Emirates, Saudi Arabia, the United Kingdom, the United States, France, Italy, Australia, and Japan.

Competitive Landscape

The UAE luxury goods market is highly competitive, with the presence of both global and domestic players. However, the global players, including Rolex SA, Prada SpA, The Estee Lauder Companies Inc., Burberry Group PLC, show dominance over the market. Key players are now also focusing on social media platforms and online distribution channels for the online marketing and branding of their products, as the United Arab Emirates has the highest percentage of internet users who transact online. For instance, luxury goods specialized e-retailers, such as Souq.com, Awok.com, bloomingdales.ae, and Elilhaam, have witnessed rapid growth in their annual revenues, owing to an increase in the number of consumers shopping online. Online sales witnessed a boom, especially during the pandemic, due to social distancing norms and restrictions.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

Rolex SA
Prada Spa
Burberry Group PLC
Estee Lauder Company Inc.
LVMH
Shiseido Company Limited
Kering Group
Compagnie Financiere Richemont SA
Breitling SA
L'Oréal SA

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