On March 31st Walpole was joined by Ludivine Labussière, Head of Strategy, Chalhoub Group and Ian Grice, Director of Harrods Private Shopping to discover how the crisis and the evolving social dynamics are impacting upon luxury in the region, from new shopping habits and attitudes towards luxury (including an emphasis on local brands and digitisation of luxury) to ‘post-pandemic’ local travel and tourism, and what the future holds for the sector in a market which is undergoing significant transformation.
The future is bright-ish."
So revealed our webinar on March 31st, Luxury in the GCC – What’s Next for the Middle East Post-Covid. Post pandemic, the market is likely to see positive prospects of rebound and there is a prediction of 2.3% real GDP growth for the year ahead.
Tourism is going to take a hit, but the second part of 2021 is expected to be more positive with predictions of a recovery in the global personal luxury goods market by 2023 to a 2019 level - although this depends not only on the overall economy recovering, but also consumer confidence.
Many consumers have been more cautious and conscious, buying more locally. Yet there has been evidence that the luxury market is more resilient than previously thought. Over a period of 12 months, 90% bought a luxury fashion item – even in times of crisis, retail therapy continues to hold its power. Millennials and Generation X will be key to the personal luxury goods purchasing. And initially, Chinese consumption will make most of the contribution to this market. Clientele-ing is something that has also deeply accelerated during the pandemic, where it was the only way to kind of keep in touch with key customers.
Chalhoub also identified two silver linings: firstly, in the retail ecosystem transformation, what we call ‘Digital Blast.’ Covid has accelerated the digitalisation of the luxury consumer and introduced them to new ways of shopping. We expect 2021 to bring much more of a rebound to the sector. Some 70% of luxury shoppers in the GCC are now comfortable with online shopping and that behaviour is likely to stay. Online channels will keep growing and brick and mortar is going to have less of a footprint – but we don't believe the Store of the Future is something which is only going to be online. Shopping is increasingly a cultural activity; the future of the store will potentially be as a social space.
Secondly, there will be an increased focus on local customers because of the changing dynamics in tourism. There will be a discount mentality where you will have more consumers looking for great deals but also for potential rental opportunities or second-hand. We'll also see a shift from experience to ownership and back again. Interesting times ahead.
Click here to watch the webinar On Demand. Please contact [email protected] for more information.
