Assessing the Impact of 2020 on the GCC Luxury Goods Market

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10-May-2021

According to Bain & Company Middle, although the Covid-19 pandemic has taken a toll on the global luxury goods market, its impact on countries, categories, and brands in the Gulf Cooperation Council (GCC) region has varied. The emergence of some positive shopping trends and the ongoing recovery o?er hope for a return to relative normalcy in 2021 and into 2022, following a 17% decline in the region’s luxury market in 2020. The GCC luxury goods market dropped to $7.4 billion USD in 2020, with di?erent country dynamics depending on exposure to tourism and repatriation of spending (see Figure 2). Although the decline in tourism hurt the market, GCC nationals (who usually purchase 30% to 40% of their luxury goods outside the region) repatriated spending in their respective countries. Countries with low exposure to tourism, such as Kuwait, Qatar, and Saudi Arabia, did not see such a sharp drop as in the United Arab Emirates (UAE), where the impact was closer to the global average decline of 23% vs. 2019. Changes in tourism ?ows had a major e?ect on the market in 2020 and the early months of 2021. In the UAE especially, where tourists account for as much as 60% of the luxury market, an undeniably large block of spending power was wiped out rapidly by ongoing Covid-19 travel restrictions.

 

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