With annual fashion sales of $50 billion (Dh184bn) and some of the world’s highest per capita spending, the GCC market presents “significant opportunities” amid a pessimistic global outlook for the industry, according to a new McKinsey study.
Annual spending per person reached approximately $500 in Saudi Arabia and $1,600 in the UAE, found the fourth annual The State of Fashion report from the consultancy, published on Thursday.
On a per capita basis "the UAE is double of the US and Saudi is double of China, and the UAE would be six times more than China," Abdellah Iftahy, partner at McKinsey Middle East and co-author of the GCC section of the report, told The National.
The report, written in partnership with the international fashion website Business of Fashion, forecasts slowing global growth in the industry for the second year in a row.
Year-on-year growth in 2019 for the total fashion industry is estimated at 3.5 to 4.5 per cent and is projected to slow to 3 to 4 per cent in 2020, driven by declining growth in North America, Europe and the emerging Asia Pacific countries, the report found.
In contrast, in the Middle East and Africa, year-on-year growth in 2019 is estimated at 3 to 4 per cent and is projected to grow at the same rate in 2020.
The majority of the 290 global fashion executives surveyed see a slowdown alongside declining global economic growth and more intense competition. Only 9 per cent of respondents think conditions will improve next year, compared with 49 per cent who said the same last year.
Among the factors driving growth in the GCC are high disposable incomes, e-commerce and changing dynamics, especially in Saudi Arabia.
“The Middle East still has potential, despite being an already well-established fashion market with a strong mall culture,” the study said. “While the Gulf countries are far smaller than China in terms of population size, the propensity of its shoppers to spend big is what gives the region an outsized role among international markets.”
Internet penetration in the UAE and Saudi Arabia is at 99 and 89 per cent respectively, compared to just 57 per cent in China. E-commerce is set to grow at around 40 per cent a year over the next five years, increasing its penetration to 9 per cent from the current 2 per cent, the report said. In some fashion categories in Saudi Arabia, it is already at 20 per cent.
The kingdom is going through some dynamic shifts, as it invests heavily in building a thriving cultural scene and opens up to tourism. Currently over 50 per cent of Saudi spend on leisure and entertainment is outside the country, with categories like luxury nearing 70 per cent. Such developments should encourage more local spending, Mr Iftahy said.
“The relaxation of the code of what women can wear, for example, has also stimulated the internal demand,” he said. “What we will see going forward is a lot of repatriation of demand from what they were spending outside of Saudi to Saudi.”
The study recommends that brands have a "winning e-commerce strategy, intimate knowledge of the consumer and cost excellence" to succeed in the GCC.
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
UAE currency: the story behind the money in your pockets
Results
5pm: Maiden (PA) Dh80,000 (Turf) 1,200m, Winner: ES Rubban, Antonio Fresu (jockey), Ibrahim Aseel (trainer)
5.30pm: Handicap (PA) Dh85,000 (T) 1,200m, Winner: Al Mobher, Sczcepan Mazur, Ibrahim Al Hadhrami
6pm: Handicap (PA) Dh80,000 (T) 2,200m, Winner: Jabalini, Tadhg O’Shea, Ibrahim Al Hadhrami
6.30pm: Wathba Stallions Cup (PA) Dh70,000 (T) 2,200m, Winner: AF Abahe, Tadgh O’Shea, Ernst Oertel
7pm: Handicap (PA) Dh85,000 (T) 1,600m, Winner: AF Makerah, Tadhg O’Shea, Ernst Oertel
7.30pm: Maiden (TB) Dh80,000 (T) 1,600m, Winner: Law Of Peace, Tadhg O’Shea, Satish Seemar
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Cricket World Cup League Two
Oman, UAE, Namibia
Al Amerat, Muscat
Results
Oman beat UAE by five wickets
UAE beat Namibia by eight runs
Fixtures
Wednesday January 8 –Oman v Namibia
Thursday January 9 – Oman v UAE
Saturday January 11 – UAE v Namibia
Sunday January 12 – Oman v Namibia
ALRAWABI%20SCHOOL%20FOR%20GIRLS
%3Cp%3ECreator%3A%20Tima%20Shomali%3C%2Fp%3E%0A%3Cp%3EStarring%3A%C2%A0Tara%20Abboud%2C%C2%A0Kira%20Yaghnam%2C%20Tara%20Atalla%3C%2Fp%3E%0A%3Cp%3ERating%3A%204%2F5%3C%2Fp%3E%0A
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
The Uefa Awards winners
Uefa Men's Player of the Year: Virgil van Dijk (Liverpool)
Uefa Women's Player of the Year: Lucy Bronze (Lyon)
Best players of the 2018/19 Uefa Champions League
Goalkeeper: Alisson (Liverpool)
Defender: Virgil van Dijk (Liverpool)
Midfielder: Frenkie de Jong (Ajax)
Forward: Lionel Messi (Barcelona)
Uefa President's Award: Eric Cantona
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
The Florida Project
Director: Sean Baker
Starring: Bria Vinaite, Brooklynn Prince, Willem Dafoe
Four stars
Killing of Qassem Suleimani
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE currency: the story behind the money in your pockets