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

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

The GCC Luxury goods market is growing significantly on the back drop of heavy reliance on oil and hydrocarbon revenues. In 2018, the region had witnessed the stabilization of oil prices and several measures have been taken by the regional governments such as streamlining the retail infrastructure and strengthening the investment landscape. 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 sales in the luxury goods in the Middle Eastern region is majorly driven by the GCC countries which is expected to growth at a CAGR of 4% in the period 2019 to 2024.

Drivers

Key Highlights

• Increasing GCC population with an expanding consumer base dominated by the higher proportion of expatriate, youth and working class population
• Booming tourism sector driving the market extensively
• Many large scale malls and shopping centers are presently under development in the GCC amid governments’ and private players’ investments in developing infrastructure to complement the growing population, a rising tourism sector and increasing GDP per capita

Restraints

Key Highlights

• Increased international brands have intensified competition within the retail market
• Increased penetration of various high-end retailers and demand for retail space have increased the rental rates in most of the GCC countries, especially the UAE. Additionally, retailers are also pressurized by the new labor localization laws, market-priced utility costs, and new tax measures such as value added tax (VAT)

Key Market TrendsDubai, UAE stands out as the regional hub for luxury shopping in GCC

Dubai has continued to be the key regional hub for the purchase of luxury goods and it also has stood out as leader in the quality of retail space. Also, other cities of UAE have risen up their rankings in terms of the cost of living. UAE has always been an appealing location for expats and continues to be so due to the highly competitive compensation packages, falling real estate prices, high safety standards, and a healthy economy in place. Local inflation level has come down in the last 12 months due to the falling rental prices and the full phase of the VAT implementation. Dubai and Abu Dhabi feature among the top 10 cities globally in terms of the new retail space under construction. They also witness highest amount of growth in terms of HNIs. Hence, UAE poses higher growth for luxury goods sales with clothing and apparel taking highest amount of share of about 40% in value.

Ecommerce sales picking up pace in the sector compared to offline sales

GCC online retail market is emerging fast and is drawing huge attention of investors across the globe. Bahrain, UAE and Qatar pose the highest internet penetration rates in the world at present. Very recently, GCC’s B2C e-commerce accounted for just 2% of the total retail sales which is quite low when compared to the global average of 5 – 6%. However, the share is rising in the current scenario. Consumers are mostly researching online before making a purchase, and with a larger number of young smartphone users joining the customer base, it is just a matter of time before pre-purchase online research gets converted into actual online transaction. In the GCC region, UAE has the highest percentage of internet users who actually transact online (46%), followed by Kuwait (35%) and the KSA (25%). The GCC online channel has witnessed the emergence of quite a few online players that have registered stronger growth. Souq.com is one of the most prominent online retailers in the MENA region. Awok.com is another UAE-based online retailer which had witnessed a 500% Y-o-Y increase in its revenues in April 2015. While there was some low base effect (as this was only the second year of its operations), a revenue growth rate of 500% clearly shows that online retailing is catching up in the GCC region.

Competitive Landscape

There is enough competition in the market with many niche palyers entering at attractive prices mainly focused on the growing number of HNIs within the region.

Additional Benefits:

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

Companies Mentioned

Al Tayer Group
Etoile Group
AW Rostamani Group
QELA
Pharmakeia
Alshaya franchise group
Santos de Cartier
Chanel
FENDI
Dolce & Gabbana
Prada
Joyalukkas

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