11 JULY 2024

According to BCG (2023 data), the luxury market in the region has reached 15 billion euros and is expected to double by 2030, reaching 30-35 billion. Saudi Arabia and the United Arab Emirates drive 81% of the region’s luxury demand (source: Google & Chalhoub Group Intelligence).

The consistent demand for luxury goods is driven by high purchasing power, the pursuit of status symbols, and cultural appreciation for fine craftsmanship and exclusivity.

Given the growth forecast for this market, we have identified some key facts of interest to the sector.

Luxury spending returns home

Before the pandemic, two-thirds of luxury spending by Middle Eastern consumers occurred abroad. Today this ratio has almost reversed, thanks to the strengthening of high-end shopping capitals (e.g., Dubai), investment in retail, and improved supply (source: Business of Fashion, 2023).

In addition, cities such as Dubai, Abu Dhabi, Doha, and Riyadh have become major luxury shopping destinations, with high-end shopping malls, boutiques, and flagship stores of renowned brands.

Top brands consolidate their leadership

Regarding personal luxury goods sales, jewelry and watch brands increased their respective market shares, with Louis Vuitton overtaking Gucci to take third place behind Rolex and Cartier (source: Euromonitor, 2023).

Investments in watches and jewelry grow

Investments in watches and jewelry make up a significant part of the market, accounting for 42 percent of the total and 58 percent of incremental sales. 

In addition, growth in men’s apparel (6 percent) outpaces growth in women’s apparel (3 percent) (source: Euromonitor, 2023). 

Luxury embraces local culture and traditions

Stylists and retailers are increasingly initiating exclusive regional limited-edition collections, for example, to celebrate Ramadan, with an increased focus on local consumers. Ramadan is the most important seasonal time in the Middle East, with luxury-related searches exceeding the average for the entire year (Source: Google internal analysis and data, 2023).

The Middle East is video-first

Online videos with YouTube as the pivotal tool are the leading source of inspiration for luxury product discovery (source: Google surveys).

Conclusions

The Middle East represents a growth ground for the luxury sector, highlighting the importance for brands to adapt and innovate to remain internationally competitive. These brands must adopt a holistic approach that integrates different strategic aspects to strike a good balance between the peculiarities of the market and the roots of the brand itself, for example through:

• Monitoring market dynamics to understand emerging trends, changes in consumer preferences, and fast-growing product categories. This enables anticipation of market developments and strategic positioning to make the most of them.
• Customization in marketing strategy according to the cultural specificities and expectations of local consumers.  Recognizing and valuing the traditions, local cultural milestones, and peculiarities of each state is key to building lasting relationships with consumers.
• The development of digital and content localization strategies specifically tailored to Middle Eastern audiences. The “video-first” approach demonstrates the importance of channels and formats that resonate with local consumer habits, underscoring the need for targeted digital strategies that optimize engagement and product discovery.

Implications for ecommerce

• Omnichannel strategies: integrating the experience in physical stores with the experience in online stores allows you to meet the preferences and needs of different luxury consumers and intercept different moments of the shopping experience 
• Localization:  it is essential that ecommerce offer features such as region-specific payment methods and localized customized content
• Luxury marketplaces: in addition to brand-owned ecommerce platforms, there has been a growth of luxury online marketplaces, such as Ounass, The Luxury Closet, and the Chalhoub Group ecommerce platforms. A distribution strategy that takes into account both the potential and potential competition with these large players is critical.

In conclusion, the Middle East presents significant growth opportunities for luxury brands willing to adapt to evolving consumer preferences and embrace their channel expectations while maintaining the exclusivity and personalized experiences associated with them.