United Arab Emirates Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

United Arab Emirates Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The United Arab Emirates Luxury Goods market was valued at USD 3.78 billion in 2021 and is projected to register a CAGR of 5.20% during the forecast period 2022-2027.

The luxury goods market witnessed a steep decline with the onset of the COVID-19 pandemic. This was largely attributed to the falling global economy and consumer resilience to splurge on luxury items. Moreover, the lockdowns and restricted store visit further restrained the market growth over the past couple of years. This mainly reduced the sales from offline retail channels, further impacting the companies that primarily relied on the brick-and-mortar platform. As a result, many 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.

In the long term, the increasing disposable income and growing premiumization among urban consumers are anticipated to drive the market demand. Subsequently, the rising tourism in the United Arab Emirates is projected to grow at a healthy rate over the forecast years and offering the players in the market with significant opportunities for expansion and growth.

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 luxury 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 to the local market. In addition, the United Arab Emirates is regarded as one of the few markets where luxury goods of any kind can be introduced and, more importantly, be very profitable for the players in the market.

E-commerce Sales Picking Up Pace 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 United Arab Emirates luxury goods market. In April 2022, Business of Preloved Fashion (BOPF), a luxury fashion brand entered the United Arab Emirates market and launched an online platform to connect buyers and sellers directly. Retailers are increasingly using technologies, like augmented reality (AR), to help online customers improve their shopping 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 United Arab Emirates luxury goods market is highly competitive, with the presence of both global and domestic players. However, the global players, including Rolex SA, LVMH Moët Hennessy Louis Vuitton, Kering Group, Compagnie Financiere Richemont SA, and Chanel SA 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, e-retailers specializing in luxury goods, 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

Please note: This publisher does offer titles that are created upon receipt of order. If you are purchasing a PDF Email Delivery option above, the report will take approximately 2 business days to prepare and deliver.