It is important to recognize the power luxury stores have in converting sales to online channels.
The luxury Brands’ retail sector has come out of the pandemic crisis stronger than ever and is expected to continue its growth. This is due to a growing middle-class population that includes close to 75% of those in the workforce.
The Savills Global Luxury Retail Report shows that despite an increase in Middle East store activity in 2021, the region’s global share is still only 3%. This highlights the region’s under-tapped potential. There is a growing desire for luxury brands to explore markets like Saudi Arabia, in addition to traditional luxury retail hubs like Dubai and Doha which have experienced a steady influx.
Saudi brand dominance
There was more activity in Saudi Arabia, where previously Dubai was the center for new store openings. Forecasts suggest that the Kingdom’s luxury market will continue to grow quickly. Sales could reach $22.2 Billion by 2024. This is a 7.2% annual growth rate between 2019-24.
Many brands place Saudi Arabia at the top of their list. Saudi Arabian nationals have always been a major driver of luxury retail sales in the region. A recent study found that nearly half of Saudis travel abroad to purchase luxury goods. The Kingdom’s recent opening of its economy and diversification into other sectors like travel and tourism will only lead to more luxury retail.
Luxury is the result of luxury
This will be accompanied by the opening of many luxury hotels, including EDITION, Fairmont, and Raffles as well as iconic lifestyle designations like Amaala, The Red Sea Project, and Grand Hyatt. This market is expected to grow in the Kingdom, which will encourage more luxury goods consumption.
We have also seen an influx of luxury brands in Qatar recently. Many luxury brands opened their doors at Place Vendome, which was the first luxury mall in the country.
Dubai is a major hub for luxury retail throughout the region. Dubai has a well-developed retail infrastructure. It has also seen significant growth in tourism, particularly after the handling of the pandemic. It continues to be a top-ranked city in terms of lifestyle offerings. The city has the advantage of being a first-mover when it comes to attracting high-net-worth and luxury travelers.
The inflow of the rich
The latest Henley Global Citizens Report predicts that the UAE will attract 4,000 HNWIs by 2022. This is a significant increase from the net inflow of 1,300 in 2019, making it the most desirable location for ultra-wealthy people to move to. It’s luxury retail offerings reflect this as Dubai is still the first point of entry for new brands expanding in the region.
Delvaux, a Belgian luxury company, recently opened in The Dubai Mall. This marks their first entry into the Middle East. Expo 2020 was a huge success, with over 24 million visitors coming from 178 countries. A successful vaccination drive, proactive business policies, and a variety of residency visa options will all help to drive investment and luxury retail growth in Dubai.
We are seeing a strong desire from luxury brands to open shops in the GCC region. Fabio Caviglia, an Italian luxury fashion brand, which we represent, recently secured its first Bahrain location and plans to expand into the UAE, Saudi Arabia, and Qatar. Follow Us on Pinterest