What are the Gulf Cooperation Council (GCC) Countries?
The Gulf Cooperation Council (GCC) is a regional political and economic union consisting of six countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). These nations are known for their significant contributions to the global luxury goods market, including the jewelry sector.
Personal Luxury Goods Market in GCC Countries
The GCC luxury goods market is projected to grow from $10.52 billion in 2023 to $13.7 billion by 2028, with a compound annual growth rate (CAGR) of 5.42% during the forecast period (2023-2028).
The anticipated long-term growth of the GCC luxury industry is driven by increasing disposable income, the rise of the millennial population, the expansion of the tourism sector, and the penetration of international market players in the region. Renowned brands like Gucci, LMVH, PVH, and Rolex have launched products that have captivated consumers.
For instance, in April 2022, the fashion casualwear brand Tribe of 6, franchised by Alshaya, debuted in Kuwait, Saudi Arabia, and the UAE. The brand promotes diversity and a positive body image by offering a range of products, including gender-neutral styles in various sizes.
Additionally, the establishment of high-end shopping malls has provided ample space for these brands to expand domestically. The trend of social media and online shopping has positively impacted the luxury footwear market in Saudi Arabia, enabling shoppers to purchase luxury brands via online platforms.
In 2021, Adidas Originals collaborated with designer Arwa Al Banawi to launch a highly customized version of the iconic Forum silhouette. The sneakers, named Arwa Al Banawi Forum Lo Sneaker, were released virtually on May 25, highlighting Saudi Arabia’s tourist map. These sneakers quickly sold out, reflecting their popularity among consumers.
The rise of e-commerce has made it easier for consumers to access product information and prices online, further driving the overall growth of the luxury goods market. GCC consumers are highly discerning about their luxury cosmetics and fragrances, prompting companies to enhance their sustainable packaging styles.
Trends in the GCC Personal Luxury Goods Market
Increasing Use of E-commerce Platforms for Luxury Goods Purchases
The online retail market in the GCC is rapidly growing, attracting global investors' attention. Bahrain, the UAE, and Qatar have some of the highest internet penetration rates globally. Improved product ranges, purchasing convenience, customer delivery date preferences, and a seamless buying experience are fueling this rapid growth. Luxury fashion is continually evolving in the digital world.
Increased internet usage has exposed consumers to various luxury goods, which is expected to drive market growth during the forecast period. According to World Bank data, in 2021, 100% of Saudi Arabia's population used the internet.
Consumers now interact with most brands through online stores and multi-brand e-retailers. Approximately half of luxury goods buyers are influenced by online content. Luxury fashion companies, from Louis Vuitton to Chanel and Gucci, are embracing digitalization, either by collaborating with multi-brand websites like Farfetch, creating their own websites, or combining both approaches.
Shifting to digital makes sense, as online purchases are expected to drive potential luxury goods demand growth. As a result, sales from brick-and-mortar retailers are likely to decline. Some notable online luxury stores include Tutus Kurniati, Goshopia, The Luxury Closet, Ounass, Tryano, Farfetch United UAE, Bloomingdale's, and Elilhaam.
UAE as the Regional Hub for GCC Luxury Shopping
Dubai remains a primary regional hub for luxury shopping, excelling in the quality of retail space. Additionally, the cost of living in other UAE cities has risen. The UAE continues to attract expatriates due to competitive compensation packages, decreasing real estate prices, high safety standards, and a healthy economy. Dubai and Abu Dhabi are among the top ten global cities for new retail space development.
The increasing number of tourists in the region has also fueled the growth of the UAE luxury market. In 2022, Dubai emerged as a popular tourist destination for Indian visitors, with over 500,000 Indian tourists visiting Dubai, according to Dubai Government data from the Dubai Statistics Center.
Compared to previous years, the number of foreign tourists arriving in the UAE decreased to approximately 8 million in 2020. However, with an increase in travel in 2021, the tourism sector is gradually reviving. Therefore, the growth of national tourism is expected to boost the demand for luxury goods in the region.
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