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Canvas8 Member : Thisispipusher@Gmail.Com Canvas8 Member : [email protected] REPORT 19 Oct 17 WHO ARE THE NEW MIDDLE EASTERN LUXURY CONSUMERS? The Middle East is home to one of the world's youngest and richest populations. In 2016 Arab consumers spent $320 billion on luxury fashion. For brands to capitalise, an understanding of cultural values is essential. Who is this luxury-loving cohort and what makes a brand a 'must have'? Location Western Asia Highlights & Data The Middle East is home to one of the Muslim consumers spent $243 billion youngest and largest populations in the solely on clothing and apparel, while the world Modest Fashion market captured a revenue of $44 billion (Thomson Reuters, Consumers from this region are wealthy 2016/17) and like to spend their money on clothing and accessories In the United Arab Emirates, 88% of the population are internet users but only 15% Technology plays a pivotal role in the lives of businesses in the region have an online of Arab Gen Yers and they expect luxury presence (The Next Web, 2017) brands to be online and easily accessible Modest fashion consumers want clothes 32% of Gulf nationals choose a luxury that marry the Islamic principles of brand because they grew up with it and propriety with their own keen sense of 57% because they trust it (Panworld style Education, 2017) The average spend among affluent Gulf Cooperation Council locals on beauty, fashion and gifts is $2,400 per month (Panworld Education, 2017) Scope Home to some of the world’s largest deposits of oil and natural gas, the Middle East’s tiniest countries also boast some of the biggest GDPs per capita. In Qatar, this stands at $129,700, the highest in the world. Nearby Kuwait, another nation rich in oil and gas reserves, boasts a GDP per capita of $71,300 , while the United Arab Emirates’ clocks in at $67,700. [1][2] To put that into context, the United States’ GDP per capita was recorded as $53, 272 in 2016. [3] Compared to the Gulf states, American spending power suddenly looks like small fry. Page 1 [ Canvas8 - Who are the new Middle Eastern luxury consumers? ] Canvas8 Member : [email protected] ---- “There is a high concentration of wealth in the Middle East as a whole, with research showing that Emirati teenagers spend six times more than the global average for their peers on clothes and accessories,” says Cassie Owen, the Dubai-based consultant Head of Fashion and Retail at MacKenzie Jones. [4] Arab consumers spent $320 billion on luxury fashion in 2016, and that number is expected to grow to $490 billion by 2019. [6] Gulf consumers in particular – notably from the Emirates, Saudi Arabia, Kuwait and Qatar – are the UK’s biggest shoppers and spend seven times more in Germany than the average European visitor. When Middle Eastern tourists visit France, 50% of them will spend more than $6,000 a day. [2] Couple that with the region’s youthful population and brands have tremendous opportunity to forge a meaningful relationship with these cash-rich consumers. “A young population provides the opportunity to establish brand loyalty early on,” Owen adds. As this deep-pocketed and globe-trotting consumer has emerged, luxury fashion houses have been forced to rethink their approach – and attitudes towards – this market. In recent years, a spate of significant changes in the fashion world demonstrates this evolution: the much-lauded launch of Vogue Arabia, seasonal abaya collections from European and American fashion brands, and the annual Dubai Fashion Week, which attracts both local and international talent. “There has been a concerted effort to promote the Middle East as a fashion hotspot specifically within luxury retail,” says Owen, whose own clients include Gucci, Fendi, Chanel and some large franchised retailers. [4 ] As Middle Eastern shoppers play an increasingly central role in the global fashion market, they are influencing everything from product design to regional flagship store openings. For brands to capitalise, an understanding of the cultural values and specific needs of this young and powerful consumer is essential. Who are they and what do they want from foreign fashion brands? A population explosion In the last 60 years, high fertility rates have transformed the Middle East into a dynamic, youthful society. In 1950, the region’s population stood at 100 million; now, it is estimated to reach 600 million by 2025. [5] This phenomenal population bulge has been closely scrutinised by media outlets, with numerous articles written on the subsequent impact it will have on everything from international politics to employment opportunities for the new generation. The Arab Spring, a series of revolutionary anti-government protests and uprisings that brought down leaders in Tunisia, Egypt, Libya and Yemen, is largely attributed to this burgeoning body of technologically savvy and politically active young people. As home to one of the youngest and largest populations in the world, the region will face numerous challenges in the years to come. But this youthful demographic, particularly those in the enormously affluent Gulf countries, should not be overlooked by fashion brands. ”More than 350 million people are in the Arab world and, in most countries, more than half of the population is under the age of 26," says Shashi Menon, publisher of Vogue Arabia and founder/CEO of Nervora. "There's an extremely large long-term opportunity here." [6] Page 2 [ Canvas8 - Who are the new Middle Eastern luxury consumers? ] Canvas8 Member : [email protected] The region is home to a tech savvy demographic of young shoppers Meutia Widodo, Creative Commons (2015) © Online and interested Technology plays a pivotal role in the lives of this youthful consumer. From Facebook to Instagram, Arab Gen Yers expect luxury brands to be online and easily accessible. “You are seeing the general consumer taking to the internet a lot more,” says Alia Khan, Chairwoman of the Islamic Fashion Design Council. [7] “It’s much easier to catch their eye when they’re on their Facebook feed or their Instagram than anything else. I believe that billboards and conventional advertising is only 4% effective now – someone is more likely to listen to their mother how to dress than a billboard.” Owen describes the Gen Y luxury Middle Eastern consumer as increasingly knowledgeable, demanding, and promiscuous in their brand loyalty. Mobile use is almost 100% in the region among Yers who use it to discover brands, engage with content and purchase things. As a result, a strong social media presence is absolutely key for luxury brands to connect with existing customers and new potential. There is a high concentration of wealth in the Middle East as a whole, with research showing that Emirati teenagers spend six times more than the global average for their peers on clothes and accessories Cassie Owen, Dubai-based consultant Head of Fashion and Retail at MacKenzie Jones The launch of Vogue Arabia’s website – which featured native and display campaigns from brands that included Chanel, Fendi, Dolce & Gabbana, Burberry and many more – proved brands’ hunger to connect with consumers on the most suitable channels. Gucci has been particularly successful with social media, generating high volumes of engagement on colourful Instagram posts that feature celebrities on the red carpet, product shots and creative collaborations. As a result, Owen says, it has managed to maintain great spend in the region. “Luxury brands need to offer a real Page 3 [ Canvas8 - Who are the new Middle Eastern luxury consumers? ] Canvas8 Member : [email protected] experience with real knowledge and storytelling to the brand,” she explains. “As well as in-store customer experiences, there is an absolute need to be digitally enhanced.” [ 4] A report on the Middle East’s e-commerce market revealed it as one of the fastest growing in the world. In the United Arab Emirates alone, 88% of the population are internet users but only 15% of businesses in the region have an online presence. [8] This untapped potential is quickly being realised by big business. In November 2016, NET-A-PORTER struck a £110.9 million deal with local mogul Mohamed Alabar to bring its hugely influential luxury e-commerce site to the Middle East; a month later, Dubai-based conglomerate Al Tayer launched its first retail business, Ounass, another luxury e-commerce site that serves customers in the Gulf. [9] They want to be equally beautiful, elegant and stylish as mainstream fashion people... it’s very doable for any designer and I think that’s what people are realising Alia Khan, Chairwoman of the Islamic Fashion Design Council Since the e-commerce market is still relatively new, Owen describes reluctance from consumers who enjoy the experience of going into stores and feel nervous about online shopping’s delivery logistics. The popularity of bricks-and-mortar stores remains at an all-time high in the Gulf, where malls are open until late in the evening and are regularly frequented by locals who view shopping as a pastime. Further proof of its enduring success in the region can be seen at the 12-million- square-foot Dubai Mall, which is currently building an extension for a number of luxury brands’ flagship stores. But while she acknowledges that it will take time for consumers’ shopping behaviour to evolve, Owen sees the shift from retail to e-tail as essential for brands to succeed. “The evolution of e-commerce is reshaping the luxury market – the growth of it in the Middle East will increase in double-digit figures in the coming years,” she notes. [4] Page 4 [ Canvas8 - Who are the new Middle Eastern luxury consumers? ] Canvas8 Member : [email protected] E-commerce is growing in the Middle East, but brick-and-mortar is still king Junhan Foong, Creative Commons (2017) © Understanding the modest fashion consumer According to Thomson Reuters, the Islamic Economy was estimated to be worth $1.9 trillion in 2015.
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