Why the Luxury Fashion Industry is Predicted to Surge in the Middle East Despite Global Concerns

The Global Luxury industry has been abuzz with speculation in anticipation for 2023. Amidst much uncertainty in the retail world, the Middle East is emerging as one of the most attractive markets for the luxury industry for several reasons.

Traditionally, the challenges facing retail do not have as great an impact on the luxury market as the accessible retail market, however the layers of challenges for next year are more complex than those that have come before. Factors such as the energy crisis and inflation will shift priorities across Europe, with the effects of the war in Ukraine, the pressures on the supply chain and the health concerns as well as resulting political unrest will unsettle the market in China. This leaves the Middle East as well as the USA & Canada to bolster growth in the luxury industry. 

Luxury is expected to grow up to 10% in 2023, with up to -3% shrinkage expected across the other industry categories (McKinsey, with the luxury fashion industry expected to grow from approx US$496m in 2022 to US$611m by 2027 (Statista)

Although risk in other regions is not the only factor adding to the attractiveness of the Middle Eastern Market. With rising oil prices, a new generation of rich, young shoppers have entered the market with 70% of shoppers in the region increasing their purchases of luxury goods. 

With this capable, attractive market, it gives the opportunity to look to the future of luxury fashion; phygital experiences (physical & digital). The key to appealing to these younger generations is to understand them-their goals, their needs and offer a connection to meet those needs. This new audience is well used to tech and expect digital experiences in their everyday life. They want exclusivity, convenience 

These consumers are self-aware and therefore want to consume ethically and expect brands to be actively protecting the planet. They expect innovative new approaches to helping solve these problems and with the arrival of more international brands comes the drive for innovation. 

Consumers in this space want to have personalized, inclusive & authentic experiences to feel as though they are expressing themselves-as they want to be seen and how they see themselves.  Luxury brands that can tap into these concerns will be well positioned to capture this growing marketshare in 2023 and beyond.