Saudi Arabia on course to emerge as future luxury capital of the Middle East

Saudi Arabia on course to emerge as future luxury capital of the Middle East
Saudi Arabia stands out as a youthful market overall, where the Gen Z population stood at 8 million in 2021, whilst almost half of the total population is below 29 years old. (AN photo by Huda Bashatah)
Short Url
Updated 08 April 2023
Follow

Saudi Arabia on course to emerge as future luxury capital of the Middle East

Saudi Arabia on course to emerge as future luxury capital of the Middle East
  • Saudi luxury market size expected to reach $15.8 billion by 2028

RIYADH: As Saudi Arabia has firmly established itself as a top destination for high-end shopping, it may not be long before the Kingdom emerges as a future luxury capital of the Middle East.

With the diversification of the economy, improvement of consumers’ lifestyle, as well as high per capita income, Saudi Arabia has seen increased spending on luxury products.

Not surprisingly, global luxury brands like Gucci, Louis Vuitton and Chanel have opened flagship stores in the Kingdom while Prada, Tiffany and Mulberry have increased their presence by establishing mono-brand outlets.

According to a report by the International Market Analysis Research and Consulting Group, the Saudi luxury market size reached $8.3 billion in 2022. Looking forward, IMARC Group expects the market to reach $15.8 billion by 2028, exhibiting a compound annual growth rate of 11.6 percent during 2023-2028.

Gen Z factor

The growing demand for luxury is apparently being driven by affluent groups, such as Gen Z, female consumers and wealthy tourists.

According to Euromonitor International’s data, the Kingdom was home to 117,000 millionaires in 2022, meaning a considerable number of ultra-high-net worth-individuals. This is alongside a large Gen Z population who support the sector, as luxury shoppers around the world are getting younger.

Saudi Arabia stands out as a youthful market overall, where the Gen Z population stood at 8 million in 2021, whilst almost half of the total population is below 29 years old.

Wojciech Orlowski, country director, Saudi Arabia at Bateel International, told Arab News: “Retailers continue to adapt to changing consumer preferences and behaviors in the Kingdom, as a younger, yet demanding demographic leverages their purchasing power.

“Unique offerings boasting excellent service quality, premium and personalized experiences, and constant innovation, are winning consumers’ loyalty in Saudi Arabia.”

The increasing participation of women in the workforce and recent social changes further support consumers’ appetite for luxury, the report said, adding that the boom in tourism, in particular luxury travel, will be an asset in developing the Kingdom’s luxury market.

Malls in focus

By all accounts, the establishment of state-of-the-art malls provides luxury brands with sufficient space to broaden their operations in the region.

“Luxury malls and retailers in Saudi Arabia are providing personalized shopping experiences to attract and retain customers,” Yousef Barghouth associate director, Retail Agency, Savills, Saudi Arabia, told Arab News.

“These may include offering customized products, personalized recommendations and tailored shopping experiences.”

He added: “Luxury malls in Saudi Arabia are also enhancing the overall shopping experience by providing amenities such as valet parking, concierge services, fine dining restaurants and other experiential offerings.

“These amenities create a luxury shopping experience that encourages customers to stay longer and spend more.”

Speaking to Arab News, Hind Ali, senior consultant, Euromonitor International Dubai, said “mall culture” has been synonymous with the Gulf region and was once the main food, shopping and entertainment destination, however, today, things have changed.

Saudi Arabia is expanding its leisure, entertainment and retailing infrastructure, paving the way for a world-class consumer lifestyle, which is increasing demand for everything luxury.

Hind Ali, Senior consultant, Euromonitor International Dubai

“Saudi Arabia is expanding its leisure, entertainment and retailing infrastructure, paving the way for a world-class consumer lifestyle, which is increasing demand for everything luxury,” she explained.

While leading and established malls remain popular and attract luxury brands, she said upcoming giga-projects and mega developments are going to woo many high-end businesses across different sectors with new and different retail concepts.

Ali cited examples of VIA Riyadh, which opened in February this year, and The Mukaab, the crown jewel of the world’s largest modern downtown development planned in Riyadh.

“While VIA Riyadh is a luxurious new destination that offers elite shopping and dining outlets, a cinema and Saudi Arabia’s first St. Regis hotel, The Mukaab is promised to be the world’s first immersive, experiential destination for hospitality, retail and leisure,” she explained.

Ramadan spending

Talking of luxury spending during Ramadan, Ali said, it was a growing trend in affluent Gulf Cooperation Council countries. “Personal luxury goods such as beauty and personal care, apparel and footwear, jewelry and luxury bags are among the biggest winners,” she explained.

Ali added: “Luxury brands including offer curated capsule collections for Ramadan and promote them through campaigns that celebrate the holy month’s values and traditions. Collaborations with influencers and social media personalities are very popular during Ramadan. Perhaps the biggest collaboration this year was Laverne’s (Arabian fragrance brand) commercial with Georgina Rodriguez, Cristiano Ronaldo’s partner.”

A report by Euromonitor International, which focuses on unlimited opportunities in luxury in Saudi Arabia, highlighted the huge significance placed on celebrating local culture and heritage.

“This drive has been supported by the government but has also clearly been driven by burgeoning consumer demand, which is opening up and encouraging business opportunities,” Ali said.

She went on to cite the example of the abaya, which not too long ago was almost exclusive to Saudi women. “Today, even after lifting of legal enforcement to wear the abaya in 2018, it has grown massively in popularity among all nationalities and become a statement piece during Ramadan,” Ali said.

“We can’t help but wonder who the first luxury designer brand will be to launch their abaya line,” she continued. “This opens up many opportunities for luxury fashion brands provided this is carried out with due diligence and care as far as cultural appropriation is concerned.”

Luxury fashion

As part of a concerted campaign to promote its local heritage and capitalize on its own affluence, Saudi Arabia is also placing great emphasis on local fashion.

The Fashion Commission, established in 2020 and part of the Ministry of Culture, aims to create a thriving fashion space to promote local talent, designers and international brands, whilst encouraging long-term awareness of culture and heritage.

According to the commission’s upcoming report, Saudi Arabia has a potentially powerful opportunity to develop a high value fashion value chain in support of the realization of Vision 2030.

“Saudi’s burgeoning fashion scene has made an immediate impact at home and internationally,” Burak Cakmak, Fashion Commission CEO, told Arab News.

“The country has all the components of a fashion hub — it is strategically located at the crossroads of three continents, has a large domestic market, a rich and unique fashion heritage, and a hugely talented pipeline of local brands that are driving all aspects of the value chain.”

He added: “Luxury fashion is quickly becoming emblematic of Saudi and we are learning to harness our style superpower and building infrastructure for a high-value fashion value chain, including a new product development studio set to open in Riyadh this year.”

Shift toward e-commerce

One of the most significant trends in luxury retail is a shift towards e-commerce, as more consumers have become increasingly comfortable shopping online.

“Luxury retailers in the Kingdom are embracing e-commerce to cater to the growing demand for online shopping,” said Barghouth.

“Many luxury retailers have launched online stores to offer a seamless shopping experience to their customers.”

“Luxury retailers in Saudi Arabia are offering omnichannel experiences that integrate online and offline channels, allowing customers to seamlessly move between channels and enjoy a consistent shopping experience,” he continued.

“As consumers become increasingly comfortable and confident about shopping online, retailers will continue to invest in improving their online services and as more consumers shop online, brick-and-mortar stores will have to improve their offering to remain relevant. This could include new concepts and formats to attract customers, while they could also blend the offline and online retail worlds to provide a more comprehensive and convenient shopping experience,” added Ali.

“Heavily influenced and guided via targeted and data insight-rich strategies like digital advertising, brand awareness, social media, and other marketing channels, happy customers are those that receive the personalized VIP treatment,” Karl Crowther, regional vice president, Middle East & Africa, at Alteryx, a leading analytics automation platform, told Arab News.

“The most effective retailers today are the ones combining data-rich online touchpoints with the quality and customer experience they can deliver in-person,” he concluded.


Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
Updated 5 sec ago
Follow

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
  • Egypt, UAE attended as guests alongside Saudi Arabia, the only Arab G20 member
  • Saudi minister: Fair trade practices must be promoted ‘to enhance economic opportunities for developing countries’

SAO PAULO: The meeting of G20 finance ministers and central bank governors that took place in Brazil on Feb. 28-29 could not be concluded with a joint statement as there was no consensus over the conflicts in Ukraine and Gaza.

But many of the leaders who attended shared similar concerns regarding the topics suggested as priorities by Brazil, which is the current president of the forum, especially reducing inequality and building multilateral cooperation to address the most pressing global issues such as sustainable development and financial stability.

Three Arab nations took part in the meeting. Besides Saudi Arabia, which is the only Arab member of the G20, Egypt and the UAE attended as guests. They manifested concurrent views regarding the central themes of the forum.

Finance Minister Mohammed Al-Jadaan, who headed the Saudi delegation along with Saudi Central Bank Gov. Ayman Al-Sayari, affirmed during one of the event’s sessions that “addressing debt vulnerabilities in low-income countries cannot happen without multilateral cooperation from all stakeholders, including creditors, debtors, international financial institutions, and the private sector,” the ministry’s media center reported.

Al-Jadaan added that fair trade practices must be promoted “in order to enhance economic opportunities for developing countries.”

Regarding low-income nations’ debt, he said implementation of the G20 Common Framework, an initiative launched a few years ago to support poor countries with unsustainable debt, must go on.

Mohamed Hadi Al-Hussaini, the UAE’s minister for financial affairs, expressed his country’s commitment to reducing inequalities through financial inclusion, Emirates News Agency reported.

He cited the Financial Infrastructure Transformation Programme, launched in 2023 with the goal of speeding up the digital transition in the financial sector.

The initiative shares the same principles as the G20-supported Global Partnership for Financial Inclusion.

Al-Hussaini said innovative instruments may have a relevant role in promoting development, mentioning green bonds and sukuk, a Shariah-compliant bond used in Islamic finance.

He also addressed the UAE’s efforts regarding energy transition and combating climate change.

The Emirati government has been helping vulnerable nations enhance their climate resilience. The UAE pledged $200 million to the Resilience Sustainability Trust in December 2023.

Al-Hussaini said the UAE decided to prioritize multilateral cooperation during the 13th World Trade Organization Ministerial Conference, which was held in Abu Dhabi on Feb. 26-29 and discussed new models for global trade.

Egyptian Finance Minister Mohamed Maait emphasized in his speech that developing nations have been impacted by challenging situations in recent months, something that affects their budgets and their ability to meet their citizens’ needs amid growing inflation crises, Ahram Online reported.

He said international cooperation is fundamental to support countries that are struggling to maintain their efforts for social protection.

He added that Egypt gained great experience in relief programs in recent years. During the COVID-19 pandemic, the country increased its support programs in order to assist vulnerable social segments at a time of economic hardship and high inflation. Any reform needs social programs if the goal is to obtain success, he stressed.

Al-Jadaan had bilateral meetings with Maait, Ilan Goldfajn, who heads the Inter American Development Bank, the French delegation and US Treasury Secretary Janet Yellen. Al-Sayari met with his Turkish counterpart.

According to a statement released by the US Treasury Department, Al-Jadaan and Yellen discussed the Saudi economy, “the progress of its reform program” and the need to “work together effectively in both bilateral and multilateral settings.”

Al-Hussaini met with the finance ministers of South Africa and Germany, as well as the executive president of the Development Bank of Latin America and the Caribbean.


Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers
Updated 01 March 2024
Follow

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

SINGAPORE: Oil prices edged up on Friday and were set to end the week modestly higher as markets awaited an OPEC+ decision on supply agreements for the second quarter amid differing demand indicators for key consumers US and China, according to Reuters.

Brent futures for May climbed 31 cents, or 0.38 percent, to $82.22 a barrel by 9:45 a.m. Saudi time, while US West Texas Intermediate for April rose 24 cents, or 0.31 percent, to $78.50.

WTI is on track for at least a 2.5 percent increase this week, while Brent is holding near last week’s settlement price. Brent has hovered comfortably above the $80 mark for three weeks.

“Brent crude prices continued to trade sideways this week ... Brent at $83/bbl has shown recent strength although fundamentals remain tilted to oversupply,” said BMI analysts in a client note.

“Expectations of a continuation of OPEC+ production cuts into Q224 is also weighing on sentiment as soft demand is expected to persist ... However, timespreads for Brent futures contracts have widened. The move to stronger backwardation (market structure) will be supportive of a more bullish stance for prices as markets are pricing in tightening in the months ahead,” the analysts added.

A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day this month, up 90,000 bpd from January. Libyan output rose month-on-month by 150,000 bpd.

A decision on extending the cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions.

Increasing possibilities of OPEC+ continuing with the supply cuts beyond the first quarter, potentially till the end of 2024, will likely keep oil prices above $80 a barrel, said DBS Bank energy sector team lead Suvro Sarkar.

Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market.

Supporting prices, the Federal Reserve’s preferred inflation gauge, the US personal consumption expenditures index, showed January inflation in line with economists’ expectations, reinforcing market bets for a June interest rate cut. This in turn could lower consumer costs and spur fuel buying activity.

However, a mixed bag of February purchasing managers’ index data from China, the world’s top oil consumer, capped price gains.

China’s manufacturing activity in February contracted for a fifth straight month, an official factory survey showed on Friday, raising pressure on Beijing policymakers to roll out further stimulus measures as factory owners struggle for orders.

“Demand side we concur that 2Q will have hiccups and we are projecting Brent to average lower in 2Q24 compared to 1Q24, before rebounding in 2H24 on the back of the potential rate cut scenario, which should boost fund flows toward riskier assets,” said DBS Bank’s Sarkar. 


Inter-Arab trade at $700bn: Union of Arab Chambers

Inter-Arab trade at $700bn: Union of Arab Chambers
Updated 29 February 2024
Follow

Inter-Arab trade at $700bn: Union of Arab Chambers

Inter-Arab trade at $700bn: Union of Arab Chambers
  • Secretary-general attends World Trade Organization Ministerial Conference in Abu Dhabi
  • ‘The Arab region’s presence in such events aids in shaping policies for freer global trade’

SAO PAULO: Inter-Arab trade stands at $700 billion, constituting 10-11 percent of global trade, the secretary-general of the Union of Arab Chambers said on Thursday during the 13th World Trade Organization Ministerial Conference in Abu Dhabi.

In an interview with Emirates News Agency on the sidelines of the event, Khaled Hanafy highlighted the potential for increased trade, expanded business opportunities, job creation and economic growth across the Arab world through standardization, improved logistics and private sector engagement.

The UAE’s strategic positioning and robust infrastructure make it a preferred hub for international businesses seeking access to international markets, Hanafy said.

Its hosting of prestigious events such as COP28 and the WTO Ministerial Conference underscores its global leadership, communication prowess and influence in international forums, he added.

“The Arab region’s presence in such events aids in shaping policies for freer global trade,” Hanafy said, adding that the conference strengthens the UAC’s position as a representative of the Arab private sector within the WTO, potentially leading to observer status in key technical committees.

This, he said, would empower the UAC to exert greater influence on decisions shaping international trade flows.

The Arab world’s private sector contributes over 75 percent of the region’s gross domestic product, roughly equivalent to $3 trillion. This sector also plays a vital role in employment generation.

Hanafy emphasized the need for even greater private sector involvement in trade to foster business growth and achieve sustainable development across Arab nations.

He championed the UAC’s role in fostering trade cooperation within the Arab world, encompassing both commercial and investment activities.

Hanafy also advocated for the establishment of the Arab Common Market, outlining essential principles for achieving economic unity across the region.

This was the official debut of the Arab private sector at a WTO Ministerial Conference.

With unprecedented access granted to businesses at the event, representatives from regional chambers of commerce seized the opportunity to voice their concerns and aspirations.

Hanafy emphasized the significance of this inclusion at a roundtable event on the sidelines, saying: “This is the first time the Arab private sector is welcomed. The Arab private sector must be here.

“This is a great opportunity. There’s an objective: We want to see the Arab private sector have a larger role.”

Promoting economic cooperation and integration across the Arab world, the UAC unites chambers of commerce, industry and agriculture from the 22 Arab League member states.

It supports governmental and civil society initiatives to strengthen regional economic ties in commerce, industry, agriculture, finance, investment and services.


Saudi Arabia’s industrial sector focussing on small investors, minister says

Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef. (@BAlkhorayef)
Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef. (@BAlkhorayef)
Updated 29 February 2024
Follow

Saudi Arabia’s industrial sector focussing on small investors, minister says

Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef. (@BAlkhorayef)
  • AlKhorayef said that the ministry has a financing program with simple conditions for small investors and entrepreneurs

RIYADH: Saudi Arabia’s industrial sector has recently focused on small investors, the Kingdom’s Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef has said.

Speaking to Al-Ekhbariya TV, the minister said that the ministry has a financing program with simple conditions for small investors and entrepreneurs.

The minister indicated that the business model of industrial cities, like the MODON oasis in Al-Ahsa, created a new opportunity for a certain type of investor and industry.

He added that most of the spaces in the industrial cities will be made up of ready-built factories, as this will largely reduce the financial burden on the investor, shorten the construction period, and facilitate obtaining the necessary licenses.


Ministry of Economy and Planning signs MoU with Saudi National Institute of Health

Representatives of Saudi Arabia’s Ministry of Economy and Planning and the Saudi National Institute of Health sign a MoU.
Representatives of Saudi Arabia’s Ministry of Economy and Planning and the Saudi National Institute of Health sign a MoU.
Updated 29 February 2024
Follow

Ministry of Economy and Planning signs MoU with Saudi National Institute of Health

Representatives of Saudi Arabia’s Ministry of Economy and Planning and the Saudi National Institute of Health sign a MoU.
  • MoU aims to develop and align the strategic direction of national development priorities and economic policies in line with the objectives of Saudi Vision 2030

RIYADH: Saudi Arabia’s Ministry of Economy and Planning signed a Memorandum of Understanding with the Saudi National Institute of Health, the ministry announced on Thursday.

The MoU aims to develop and align the strategic direction of national development priorities and economic policies in line with the objectives of Saudi Vision 2030.

It also aims to enable the decision-making process through the preparation of methodologies and studies, the ministry said.

As part of the MoU, scientific and hands-on experiences will be exchanged and both parties will prepare studies and research related to their work in order to improve quality.

They will also organize joint workshops and training courses to enhance capabilities and skills, and benefit from the infrastructure and public facilities of both parties.