The UAE’s luxury market will reach a whopping €276 to 281 billion by end of 2018
The annual growth in the luxury goods market has intensified significantly. In 2008, the market value figures (year-over-year growth) were at 12 per cent, and has since, over the last decade, skyrocketed with online market share reaching nine per cent – with 24 per cent annual growth.
According to Bain & Company, there are four key aspects or trends that are driving the current luxury market, the first being the Chinese. Chinese consumers (specifically the youth) are fashion-oriented and conscious of the value equation on prices for (luxury) goods. This means the consumerism is luxury-based, high-end and driven. These consumers are continuously influenced by social media. With the ever popular well of renowned Youtubers and Instagrammers, sales in the fashion industry and particularly in the casual, athleisure and streetwear departments have increased. All this, plus the ever-fluctuating exchange rate, means that the market growth value is constantly being redistributed between various regions, with no significant harmful impact on the global market growth.
Areas that have benefitted are those like the Americas. The U. S. benefitted from a weaker dollar over the holiday season, bringing in price value from tourists from Asia and Europe, whilst the local population increasingly sought out luxury items. Canada’s performance in the market has also grown, whereas areas such as Latin America and Mexico showed no significant improvement or decline. Although the region is expected to improve between three to five per cent by the end of the year. As mentioned earlier, China’s market-place will see the main burst of growth by 20-22 per cent, whereas regions such as Japan, will grow by six to eight per cent. Asia, Hong Kong and Macau should expect a nine to 11 per cent growth, whereas the rest of the world should only expect the slightest increase.
The UAE and Dubai specifically, are expected to remain stable with the support of international tourists. Dubai’s market saw a recovery in their losses last year, through the Tourism department. The city continues to lure tourists, with their spend comprising five per cent of the GCC luxury market ($400 million). The positive trends foreshadow driving the market by six to eight per cent higher each year, reaching AED1,180 billion ($321 billion).
Bain & Company have predicted that in five to seven years, growth internationally will increase a further four to five per cent per year. While the unstable exchange rates could increase the market size up to €366-€390 billion.