GCC luxury e-commerce to reach $1.5bn in 2021, says research

Chalhoub Group’s 2017 White Paper advocates omnichannel retail strategies

E-commerce sales will account for $1.5 billion of the Gulf’s high-end luxury segment within the next four years, according to Chalhoub Group.

The UAE-based group – one of the region’s biggest franchise partners, counting Louis Vuitton, Fendi, Lacoste and Marc Jacobs among its brands – included the forecast in its latest annual White Paper on the luxury market, published this week.

Citing Chalhoub Group’s “proprietary research and estimates”, the report notes that the Middle East e-commerce industry has been lagging behind the global average in recent years, accounting for 2.5 percent of total retail sales in 2015 versus 7 percent globally.

Luxury products’ online sales amounted to just $200 million-$230 million of total sales, it added.

However, with the ‘youth bulge’ – more than 50 percent in the GCC population is aged under 30, and almost three-quarters in the wider Middle East – high levels of internet penetration and governments increasingly focussed on the digital revolution and investing in technology and entrepreneurship, the industry is set to soar by 2021.

The e-commerce contribution to the Gulf high-end market is expected to reach a total value of $1.5 billion within the next four years, Chalhoub Group said.

The digital shift will continue to disrupt traditional retail models and force luxury brands to  adopt omnichannel strategies aimed at a younger audience.

Increasingly, the future of luxury hinges on ensuring customers’ experience is seamlessly connected on- and off-line, the report concluded.

It said: “Modern consumers have new expectations and care about experiences more than brands. They also expect a highly personalised and streamlined path to purchase, regardless of channel or device.

“They extensively research products and trends on the net, readily taking advice from online influencers, whose clout is ever increasing. They are extremely assertive and want to be part of the conversation.”

As a result, young and creative entrepreneurs are remodelling the GCC luxury scene, the report said, citing a rise in luxury sharing and borrowing platforms such as The Luxury Closer, So Chic UAE and Kuwait-based Boutiqaat.com.

Anthony Chalhoub, Co-CEO Chalhoub Group, said: “The internet is instrumental in transforming GCC luxury consumers who now are very aware of labels, prices, trends and products, and can find almost any item on the web.

“Faced with this level of volatility and exigence, we all have a lot to do, from adapting our websites so they are user-friendly and accessible, to training our teams to be fully involved in the omnichannel, as the store and the digital properties now must complement one another – all the while protecting the brand’s DNA.”

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