The Middle East and Africa luxury good market is estimated to grow at a CAGR of approximately 8.5% during the forecast period (2020-2025).
- In Middle East and Africa, especially in GCC countries 70% of consumers claims to have increased their spending over luxury good. In past few years Middle East luxury goods industry has been through a period of expansion, as major companies have grown by extending their reach of their brand distribution network and opening new stores in the region.
- The consumers in the countries such as Saudi Arabia prefer luxury goods over conventional ones, owing to their high purchasing power and sustainable demand for these products that reflect their social status. Such factors have led companies, such as MCM (Mode Creation Munich), to open their first boutique in Saudi Arabia to tap the market potential. The boutique offers a wide range of luxury leather goods and accessories, such as bags, purses, and wallets.?
- The growing economic conditions and high purchasing power of the Middle Eastern population have resulted in many ventures and openings for new brands in the region. For instance, in 2018, UAE-based Chalhoub Group partnered with Farfetch to create a leading platform for luxury products, including leather goods, in the Middle East.?
Key Market Trends
Increasing Demand For Luxury Leather Goods
The Saudi Arabia and Iran are huge producers of leather, with a large number of tanneries inside the countries. According to Leather Export Council, the United Arab Emirates ranks among the top five countries worldwide for luxury branded luggage. Luxury leather luggage holds major market share, when compared to other leather goods segment. The United Arab Emirates is one of the most attractive countries in the Middle East for luxury brands, and is a strategic center for companies deciding to enter the regional market. Therefore, competition among players is very strong for luxury leather goods market, intensified by the growth in online shopping. ?Moreover, the Middle East has one of the largest young populations in the world and millennial in the Middle East are richer than the average, and their willingness to buy luxury leather goods is stronger, which is expected to drive more sales of luxury leather goods in upcoming years. ?The footwear market in the region, on the other hand, is majorly driven by the increasing demand for luxury leather goods in the gulf countries. The United Arab Emirates and Saudi Arabia are the leading consumers of leather footwear in the region. ?
United Arab Emirates Held a Significant Share in the Market
With more than 90% of the population residing in urban areas and the rising disposable income per capita, the preference for luxury products is high among the consumers in UAE. Abu dhabi and Dubai account for more than 50% of the over all population in the country. Dubai alone accounts for 30% of the Middle East’s luxury market. One study found that UAE citizens spend around 30% of their monthly salaries on luxury goods. The UAE was recently eighth in a list of countries whose consumers are trading up from mid-market brands. Established international brands have more advantage, as foreign products account for 58% of all UAE purchases.
The Middle East and Africa luxury goods market is a competitive market with the presence of various major players, such as Rolex SA, Prada S.p.A., Burberry Group PLC, Christian Dior SEand Chanel S.A. The key luxury goods players are embarking on mergers and acquisitions, and entering into partnerships /agreements as one of their key strategies to achieve consolidation and optimize their offerings. Major players are focusing on introducing new product offerings in the market to cater to the interests of the consumers as per ongoing fashion trend among goods, like footwear, accessories, and luggage bags. Since the leather products have significant role to play in luxury goods market, top companies are engaged in delivering quality leather product offerings for the fashion inspiring consumers.?
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