Marriam N Mossalli The Ramadan raids of luxury department stores in London and New York City by Gulf patrons are nothing new. The world has witnessed first hand the indulgent ways of the Arabs abroad and it seems they have finally taken notice of the potential market share that they had previously taken for granted. The Kingdom of Saudi Arabia, which makes up 64 percent of the GCC population, comprises a large number — if not the majority — of these Khaleeji tourists. According to a recent survey of millionaire density from Boston Consulting Group, Saudi Arabia is one of the top 20 countries with the highest proportion of millionaires. This type of disposable income is a commodity to brands, especially niche market ones. In addition, certain anomalies, such as the global financial slowdown in 2008, have increased this interest into the GCC and its inhabitants' consumer behaviors. Super brands are eager to tap into the market share of one of the few countries that benefited from the rise of oil prices during the economic recession. The truth is many brands may need to reassess the way they approach today's Saudi costumer. While Saudi may not have been directly affected by the recession, their shopping behaviors definitely have been. “I believe each person has their own definition of luxury, and today, Saudi women across the board have access to fashion and design at every price point,” explained Princess Reema Bint Bandar Al Saud, CEO of Alfa International & Al Hama LLC, two of the leading luxury retail corporations based in Saudi Arabia. “Hence, they are able to define their space and themselves in their own terms.” Princess Reema has a point. With an imbalanced population inclined toward the youth and a median age of 27, the face of the Saudi consumer is changing to one that is significantly younger and more fiscally responsible. “With her and her family in mind, we are looking for projects that serve to entertain and deliver the highest quality at an appropriate price point.” Presently, the luxury sector can be divided into two tiers: The first being the ultra-luxury, top tier, which consists of multi-millionaires and billionaires, whose purchasing behaviors are motivated by service and customization, rather than price. The second tier is comprised of another type of affluent customer, who is highly concerned about value. The first tier, which is the one that most super brands aim to tap, is currently investing its efforts on how to appeal to these customers, while in Saudi. Currently, most sales are made abroad, leaving a very potentially lucrative void in the local market share. “I believe the luxury sector will finally catch up to the client. We have a very knowledge customer that has hysterically been under-served in terms of customer service,” commented Princess Reema. “I believe that stores will begin to deliver a more interesting environment and experience for the customer.” One proof of that has come in the form of the newly launched VIP Room at Harvey Nichols Riyadh, the luxury department store under Alfa International. Many other boutiques are following suit, aiming to provide a highly customized experience to the individual. The second tier is catered to by the rise of affordable luxury brands. Brands, especially fashion houses, are aware that this customer is still very much driven by quality. Because this customer grew up in an indulgent household, they've witnessed luxury firsthand, yet are no longer under the full support of their affluent parents. Therefore, this new luxury customer is focused on value, and as a result, is also price-conscious. Sales, diffusion lines, and mid-high tiered brands, such us MK by Michael Kors, Coach, and Furla, appeal most to them. Events and brand activations and launches have also seemed to be on the increase. Globalization, seen through increased Internet activity and e-commerce penetration in the region, has assisted in this newly invigorated approach—and not just by the international names. Local companies and distributors are just as eager to connect with their local luxury shoppers. Princess Reema agrees that the last few years have seen a shift of interest and efforts into the local market. “Alfa seeks to provide a dynamic product mix to match the lifestyle of the modern Saudi woman.” The Saudi woman, unlike her male counterpart, has a disposable income that doesn't go to the necessities of living—home, food, or education. She has become the main target demographic for most luxury brands, and the evidence is clear. Whether it's capsule collections, exclusive dinners with international designers, or endorsements from unrelated YouTube stars, brands are doing whatever they can in order to exploit a market that holds all the power. The writer is the founder of Saudi Arabia's leading luxury consulting firm Niche Arabia.
