What: A snapshot of the situation of Luxury in the Middle East.

Why it is important: Younger, tech-savvy and looking for specific products helping them to define their identity: what is happening in Middle East when it comes to Luxury customers should be scrutinized by department stores worldwide.

The Middle East has been one of the regions in the world which probably suffered the less from Covid-19 as a whole. But this does not mean that the situation of the market has not gone through significant changes: oil prices have soared, VAT has been introduced in most the countries, and the region has been at the center of the world’s attention with Expo 2020 in Dubai and the Fifa World Cup 2022 in Qatar.

Vogue Business performed a study in partnership with Chalhoub to understand the main trends in the region when it comes to Luxury:

• The top 10 does not mention world -leading brands, such as Louis Vuitton, which suggests that Middle East customers have an appetite for variety and a wider range of brands (the top 5 is, in this order, Hermés, Givenchy, Coach, Dolce & Gabbana and Gucci) rather than the usual suspects. However, at the same time, the most performing categories are Shoes and hard luxury (jewellery, watches, bags) which is somehow contradictory.
• E-commerce has doubled in the region, lead by pure players including local ones (Farfetch, Ounass, Net & Porter), which all three capture 82% of the business. The UAE remains the center of attention for brands, even though investments in KSA are increasing.
• Omnichannel expectations are the same than in the rest of the world, however live interactions with sales advisors, be it in store or online, is more valued by Middle Eastern customers, suggesting that they are more tech-savvy than in other markets,
• Second-hand and resale are deemed valuable by customers, even though the market is still small (2%) compared with the world average (10%). Two specific elements are interesting: the study suggests that customers are more interested in selling their goods than buying pre-owned ones (which might echo an appetite for trade, but also contribute to a social posture), and re-sale is not all about mass products in the region, as luxury goods see their share of the business increase regularly,

According to Vogue Business, the market will represent $11bn in 2023, with a growth based on a market which remains on average young (especially thanks to the influx of KSA new customers). They will be increasingly looking for brands able to reflect their own identity, which, mixed with their low interest for local brands (11%) , implies that international brands will be increasingly encouraged to collaborate and issue market-specific collections in order to make the most of this opportunity.

The situation of Luxury in the Middle East