Saudi luxury retail sector to rebound in 2017

Luxury retail in Saudi Arabia, and the wider Gulf region, can withstand headwinds that have slowed the growth of the sector globally over the past two years, industry experts told Argaam.

“In general, retail and luxury retail in the Kingdom has been properly handled to face the upcoming challenges,” Mohammed Alawi, chief executive of Jeddah’s Red Sea Mall, told Argaam.

“So far, we are able to constantly elevate this industry in the short and long term,” he added.

Starting 2015, the luxury retail sector worldwide slackened with growth slowing down to 1 percent in the first quarter of 2016, according to a Bain & Co. report on the sector published last year.

However, the consultancy’s 2017 report notes that the global luxury market is set to get back to growth.

Nandini Kelkar, research director (customer research) at Frost & Sullivan, told Argaam that the luxury goods market in the region, especially UAE, will continue to grow driven by demand from GCC residents.

“Apparel, accessories, personal care and beauty products, and smart devices are expected to see the quickest rise in growth,” Kelkar said.

Technology-related products – wearable devices, smart watches, high-end smart phones – will attract consumer interest, with youngsters contributing significantly to tech-driven luxury products, she added.

“The UAE is the most popular luxury shopping destination among global travelers due to lavish shopping experience offered by its high end mall culture, Kelkar said.

In Saud Arabia, Alawi said, it is not just products but the entire experience is what defines luxury for shoppers.

“Consumers want customized and meaningful services for their shopping habits,” he said about the factors that will impact the growth of luxury retail in the country.

Meanwhile, digital disruption in retail is also beginning to have an impact on the luxury segment.

“As consumers are getting accustomed to online shopping, luxury brands will also have to offer e-commerce option in the region,” Kelkar said.

Brands like Gucci and Burberry are already offering online shopping option for the UAE customers.

Alawi said traditional retailers and malls will have to adapt to the changes in consumer habits, even at the level of luxury retail.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com