Tuesday 26 May 2020

Despite the introduction of VAT, the forecast for the growth
of the luxury market is positive

Tourism sector boosts UAE luxury goods market

BEIRUT, June 3, 2019

The sustained growth in the United Arab Emirates luxury market can be attributed to an increase in brand omni-channel strategies and the continued rise in the tourism industry, said an industry expert.

“Despite the introduction of VAT, the forecast for the growth of the luxury market is positive. It is expected that the luxury market will continue to experience growth as the market matures and adjusts to global trends,” added Herve Ballantyne, partner and Consumer & Industrial Products Industry leader at professional services firm Deloitte Middle East.

“In an age of fast changing trends, luxury companies are re-examining the value of brand heritage and history and are adopting an omni-personal approach focusing solely on the new age consumer. “To accomplish this, they are committed to making significant investments in digital technologies,” he added, commenting on Deloitte’s 2019 edition of “Global Powers of Luxury Goods”.

The world’s top 100 luxury goods companies generated aggregated revenues of $247 billion in fiscal year 2017, representing composite growth of 10.8 per cent, said the report.

Despite the recent slowdown of economic growth in major markets including China, the Eurozone and the US, the luxury goods market looks positive, it added.

Global Powers of Luxury Goods Top 100

The world’s Top 100 luxury goods companies generated aggregated revenues of $247 billion in FY2017, up from $217 billion in the previous year (an increase of $30 billion). Annual growth also jumped to 10.8 per cent, on a currency-adjusted composite basis, much higher than the previous year’s 1.0 per cent growth. Seventy-six per cent of the companies reported growth in their luxury sales, with nearly half of these recording double-digit year-on-year growth.

The minimum revenue threshold required to enter the world’s Top 100 list of luxury goods companies in FY2017 was $218 million, up by $7 million from FY2016, with an average company size of $2.47 billion.

The Top 10 companies accounted for nearly half (48.2 per cent) of the total luxury goods sales of Top 100 companies. Among these, while the top three companies maintained their positions, the remaining ones moved up or down by one position.

Cosmetics and fragrances was the top-performing sector in FY2017 with 16.1 per cent sales growth, which was mainly due to the double-digit year-on-year growth of seven companies out of the total 11 in the sector.

Eighty-eight of the Top 100 luxury goods companies are headquartered in nine countries, and they account for 93.4 per cent of Top 100 luxury goods sales. France has the largest companies with an average size of $8.29 billion, which is much higher than the average Top 100 size of $2.47 billion.

France was also the best-performing country, achieving 18.7 per cent composite sales growth in luxury goods in FY2017, and also contributed the largest share to the total sales of Top 100 luxury goods companies. Although Italy has the highest number of companies (24), it had the lowest sales growth rate. – TradeArabia News Service


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