Gulf stream

With each of The Gulf Cooperation Council (GCC) countries looking to diversify their economies away from a dependence on oil, there is a growing opportunity for brands, and in particular, those which appeal to the dynamic demographic within the region.

Online shopping
Within the GCC, under 25s account for over 50% of the local population. Currently in Saudi Arabia (the country that represents the largest economy in the region), 63% of the population are under 30.

The diversification of the economy and the growing tourism and labour markets, coupled with social initiatives – such as increasing sustainability and digitalisation – is opening doors to employment opportunities and is fostering productivity, innovation, and economic growth . The GCC is expected to see new jobs increase by 5% this year.

Consumer trends in the GCC are largely affected by the behaviour of younger consumers. For instance, in the UAE, 64% of Gen Zs and Millennials had made a purchase through social media in 2023, with many discovering new products, brands or services through online platforms. Additionally, 78% said they would like the opportunity to try clothes on virtually through augmented reality, emphasising the demand for online commercial experiences. A recent PwC survey of the Middle East, of which 79% of respondents were between 18-41 years old, found that over 50% of respondents make purchases online, or utilise search engines or social media to drive purchasing decisions.

The luxury market
The luxury market in the Gulf bounced back quickly after the pandemic, valued at almost USD$10bn and expected to reach up to $38.5bn in 2030. Growth in the market is attributed to the young affluent population as well as the tech savvy consumer base present. In 2022, both the UAE and Saudi Arabia saw online sales account for 20% of all personal luxury sales. Prior to the pandemic, almost two-thirds of luxury purchases were made abroad.

In 2022, the tables turned as c.60% of spend happened domestically. The UAE has long been a staple in the luxury world with consumers, given the large expatriate community and attracting affluent tourists. Wealthy tourists and residents alike have been able to shop in prestigious malls such as The Dubai Mall and the Mall of the Emirates. Saudi Arabia is beginning to follow suit, with developments such as VIA Riyadh (seen above). VIA Riyadh combines entertainment, hospitality, and luxury shopping in the Salmani style of architecture to entice the wealthy.

Outbound tourism
As many of the GCC countries look inwardly to entice both international and domestic tourists, it is also likely that many from the region will look outwardly, as a more global view has increased the appeal of international tourism. The outbound travel & tourism market out of the GCC region is forecast to grow at a CAGR of c.17% between 2021 and 2031. Recent forecasts for 2024 international departures volumes indicate that the Middle East region as a whole is set to grow 9% from 2023 and 15% from 2019. These changes are more significant relative to all other regions and demonstrate the importance of this region, which is one to watch for aviation and travel retail markets.

Historically, Chinese passengers have been the highest spenders of all the regions, but the pandemic has reduced Chinese traffic to all destinations. So, who will be the next big player? A growing luxury retail market in key economic countries in the GCC demonstrates the affluence within this region, not dissimilar to the affluent Chinese. Additionally, a growing young population in the GCC countries means that Gen Zs and Millennials are forecast to represent 50% of travellers by the end of the year.

Overall, the GCC is growing in many ways, from a rising new labour force to a thriving luxury market to outbound tourists. We will likely see the region continue to develop and changes will be driven by the young and the affluent. As the outbound tourist market develops, it is likely that the rest of the world will also have to adapt and accommodate for a new user segment.

If you want to find our more about our work in GCC countries, simply reply to this email to get in touch with our expert team.

Alex Foy