GCC LUXURY RETAIL MARKET SURGES AHEAD: AN IN-DEPTH ANALYSIS
The GCC’s luxury market continues to outpace global growth, achieving unprecedented milestones in 2023, according to Chalhoub Group. With the personal luxury market in the GCC growing at double the speed of the global industry and reaching a record USD 12.5 billion by the end of 2023, the industry’s significant growth highlights the region’s robust demand for high-end fashion, luxury watches and jewellery, and prestige beauty cementing the GCC’s key role in the global luxury landscape.
Jasmina Banda, Chief Strategy Officer and SVP Fashion JVs at Chalhoub Group, commented: “The region’s luxury market is expected to continue its impressive growth trajectory, driven by strong macroeconomic fundamentals, a thriving tourism sector, and dynamic consumer behaviour with 53% of GCC residents expressing optimism about the state of the economy. This ongoing growth and dynamism in underpinned by numerous new openings including those of “new luxury” brands such as Zimmermann in Mall of Emirates and Jacquemus in Dubai Mall, pop-ups inside and outside of malls, and events happening across the region.”
In terms of market categories, Fashion remains the largest within the GCC luxury market, valued at USD 5.2 billion, closely followed by watches at USD 5.1 billion. The high-end fashion segment alone grew by 10% in 2023, far surpassing the global average growth rate of 4%, and continues to experience strong growth +7% in Q1 2024. Ultra high-end and high-end segments represented 86% of total luxury fashion market and increased by 11% and 6% from the previous year respectively.
The UAE emerged as the top market across all high-end fashion segments including ultra high-end, high-end , aspirational, and accessible luxury, owing to its vibrant tourism sector, influx of high-net-worth individuals (HNWIs) and resilient local spending.
The GCC’s beauty category represents a strong category with growth across the region. Overall, the region witnessed a 15% year on year growth in 2023 and +10% in Q1 2024, with the UAE representing the top market in Prestige Beauty, driven by strong domestic spending and healthy tourism in the nation, closely followed by Saudi Arabia. Makeup and skincare increased their weight within the prestige beauty market, with skincare leading in terms of growth at +30%. Mid-range and limited-distribution brands were the fastest growing segments within skincare while high-end and prestige grew slower.
In terms of beauty products, fragrances (48%) were the most purchased beauty product by females in the GCC, followed closely by facial moisturizers and lip makeup. Top factors influencing purchases of beauty products included good value for money (36%), clean ingredients (35%), and easy to use at 35%.
To enhance the shopping experience, consumers stress the importance of personalised services and convenience. When it comes to fashion purchases made in the past 3 months 2 in 3 consumers seek guidance when making fashion purchases either from personal stylists (36%) or in-store sales assistants (31%).
The positive outlook on the regional economy is also evident in consumer’s personal finances with 93% claiming to do well financially. 60% of respondents in KSA particularly state that the believe economy is stronger, with 70% of affluent KSA consumers reporting that the economy has improved over the past three months. Despite concerns regarding the rising cost of living, environmental factors, and the geopolitical state, GCC consumers mainly embrace positive feelings citing hopefulness (43%), happiness (39%), and confidence (34%) as the three top emotions.
The insights provided by Chalhoub Group highlight the GCC’s pivotal role in the luxury market’s evolution. With strong performance across various segments and countries, the region is poised for sustained growth and innovation in the years to come.
Last Updated on 6 months by News Desk 2
