The GCC luxury goods market has continued to grow fast, at a rate of five to eight per cent, despite regional woes, according to a study.
The market has been mainly driven by tourism growth (nine to 10 per cent) while the resident market has been growing but at a slower rate, according to Bain & Company’s Global Luxury Goods Worldwide study.
“GCC nationals and residents continue to buy a large share of their luxury goods abroad to experience their favourite brands in their native environment. As GCC retailers continuously enhance the customer experience in-store, they may succeed in capturing this latent demand,” said Cyrille Fabre, Bain & Company partner, who leads the Retail & Consumer Products practice for the Middle East.
In a report last year, Bain stated that Dubai commands around 30 per cent of the Middle East luxury market and around 60 per cent of the UAE’s luxury market. The Dubai Mall accounted for around 50 per cent of Dubai’s luxury purchases.
Globally, growth in the sector remains steady despite issues such as economic weakness in Europe, the market crisis in Russia, and destabilising exchange rate fluctuations across the world. Sales revenue growth in the luxury sector is still in line with 2013’s full year figures, and is expected to continue through the year, said Bain.
Overall growth for the first quarter extended the 2013 full year trend of four to six per cent, a possible ‘new normal’ growth pattern, according to Bain. “With luxury goods we are seeing the emergence of a new normal: the global market is maturing, stabilising and consolidating,” said Claudia D’Arpizio, a Bain partner in Milan and leader of the firm’s Global Luxury Goods and Fashion Practice.
“It is becoming more resilient to economic crises, more responsive to a demanding and highly mobile global consumer base, and less reliant on market booms for growth. For all these reasons, luxury brands everywhere should be focusing on how to build growth organically,” added Claudia.