International retailers selling into the Middle East need to take note of the demand for luxury products and mobile responsive sites
A quick look at the Luxury opportunity:
The news is good for luxury retailers selling into the Middle East. While growth for bricks and mortar retailers is plateauing due to a reduction in tourists visiting the region’s impressive shopping malls, sales in the overall luxury market reached US$2.97 billion in 2020 with a projected CAGR of 7.17% until 2026. This shows high demand from residents of these cities for luxury goods, one which can be exploited by online retailers.
Key things to note in terms of the Luxury Goods market:
- Middle Eastern consumers have the highest per capita spending on luxury goods.
- The Middle East is now the 9th largest luxury goods market globally, and is steadily moving up the ranks.
- The UAE is a top importer of Swiss watches, with Dubai alone importing between 800,000 to 1,000,000 premium watches per year.
- The UAE will continue to be the largest luxury market in the MEA through to 2022
- 28% of the population between 15 and 29 years old.
Luxury retailers hoping to take advantage of the opportunity will need to invest in an Mcommerce strategy:
The Middle East has the highest mobile penetration in the world and a growing adoption of mobile commerce by many of these users. The Middle East goes against common global trends with many mobile web users never (or very rarely) using a desktop, laptop, or tablet to access the web.
One leading regional online retailer reports that many online shopping categories, such as fashion, boast much higher mobile sales than computer-based transactions. They expect that, in the coming years, mobile shopping will entirely take over from desktop/laptop devices being used to make purchases, with 70% of purchases (in Saudi Arabia, the Middle East’s second-biggest market) from this retailer being made on phones.
A strong digital ecosystem is emerging here, and governments are particularly active in promoting a digital future, with both the UAE and Saudi Arabian governments investing heavily in making government services and hubs available online. The aim is for citizens to be able to access all services via mobile anywhere, at any time.