With 50% of population under the age of 30, GCC consumers are digital natives, early adopters and most importantly, high spenders (spending 6 times more on luxury goods than others).
Yet, with an internet penetration as high as 88%, only 15% of businesses in the GCC have an online presence.
Cities like Riyadh are growing rapidly with the influx of tourism and entertainment – and businesses are experimenting with new propositions, such as innovative stores focusing on new and exciting experiences.
This confluence of factors presents an exciting opportunity for brands to build a unique proposition appealing to the young and affluent consumers in the region.
But what makes this set of luxury consumers particularly interesting?
A multiplicity of behaviours, aspirations & connections to luxury
One size does not fit all: the region’s Millennials have very diverse behaviour, aspiration and relationship with luxury brands.
Five years ago, the main source of influence for 70% of consumers were their friends and family. Today however, most of them rely on social media and regional influencers to discover new brands.
The rate of luxury shoppers in Saudi Arabia researching online before making a purchase goes as high as 90%.
As a result, the once super loyal luxury consumer is more volatile and less attached to established brands. GCC consumers are more open to try new brands and are looking for novel experiences.
While they continue to spend the same amount than they did before, they are evolving from spontaneous shoppers to being more cautious on what they spend. They are more value-conscious and willing to postpone a purchase to get a better price somewhere else – especially given the price difference with Europe.
The rise of locally-tailored luxury consumption
Though there are many influences impacting the path of luxury consumption in the region – one of the most prominent is the rising demand of modest fashion. Young women are embarking on new career opportunities and are more on move than ever before: they seek to be a part of mainstream fashion, while respecting the codes and values of their culture.
With an increased focus on the balance between traditions, modernity and community, local brands are recognising the market gap, giving way to websites dedicated to modest fashion, such as modist.com.
International brands are playing catch-up with Net-a-Porter, adding a new category with a selection of pieces specially curated for the market, or DKNY launching a collection dedicated to the festival of Ramadan.
But that’s not enough.
The GCC: a rapidly evolving consumption market
With GCC Millennials increasingly favouring local niche brands, global players need to rethink beyond their go-to strategy. They need to transition from traditional transactional models to more relationship and experience focused models.
The emergence of the Saudi market also challenges the place and role of Dubai as a necessary gateway to reach Saudi consumers, in a movement that reminiscences the earlier emergence of Hong Kong as a necessary gateway to China.
In such a challenging environment, it is more important than ever to understand the societal codes, cultural requirements and have a steady grasp on the evolving consumer behaviour.
Leveraging intelligence & data in the era of digital
In the face of such complexities and the untapped potential of the region, a company like Luxurynsight works with regional and international luxury brands to tackle the growth opportunity the GCC and MENA region presents.
Built around an Advisory Board of leaders from LVMH, Hermes, Chanel, L’Oreal etc, Luxurynsight became the leading data intelligence platform dedicated to the industry. Its value notably comes in the form of a unique data platform & data services that can empower corporates to build locally-adapted strategies fuelled by the right data.
The GCC presents a tremendous untapped potential and plethora of opportunities for luxury brands: all it takes is a well-rounded data-driven strategy and, most importantly, a first step in that direction.
This article is brought to you by Luxurynsight