As the global fashion industry faces headwinds in other regions, the outlook for the Middle East remains strong. The region’s $89 billion fashion industry is set to record a 7% CAGR over the next five years, according to Fashion in the Middle East: Optimism and Transformation, a new report from BoF Insights, the data and analysis think tank at The Business of Fashion (BoF).
The report examines the broader competitive landscape, growth drivers, and customer profiles in the Middle East, zeroing in on the United Arab Emirates (UAE) and Saudi Arabia (KSA), which account for approximately half of fashion industry revenues in the region.
High fashion spend and projected growth with almost half of high earners spending $1,000/month on fashion
According to a BoF Insights survey of 2,000 male and female customers, around half of general consumers in the UAE and KSA spend more than $1,000 per year on fashion. For the highest earners with the UAE and KSA, approximately 30% to 55% spend up to $1,000 per month, on average.
The new Middle East fashion consumer: blending global and local styles with digital savvy
The profile of the Middle East fashion customer is evolving rapidly and this is changing the way they shop. Modes of dress are changing as consumers embrace a contemporary Arab style that blends local and western fashions. More women are entering the workforce and there are more options for leisure activities. Today, consumers in the UAE and KSA spend 27% and 43% respectively of their fashion budgets on local traditional clothing, while the majority is spent on more global or international styles.
Bags, jewellery, and watches have historically been popular categories in the region due to their positioning as status symbols and their ability to be easily paired with traditional garments. However, apparel and footwear sales are set to grow significantly faster than accessories over the next five years, expected to record a CAGR of 8% versus 5% for accessories.
Regulatory changes and government investment lower barriers to entry
The business landscape is also changing in many parts of the Middle East, giving global brands greater opportunity to explore different business models in the region.
Go-to-market strategies are changing to reflect a shifting regulatory environment. Traditionally, international brands needed local partners to enter the region, which provided access to new customers, on-the-ground business relationships, and market intelligence, among other benefits.
Now, new government-endorsed free-zones in the UAE, KSA and other Gulf states are making it easier for international businesses to set up local headquarters and fully owned operations, often with attractive tax structures and other incentives. The network and sophistication of the free-zones will likely grow as local governments seek to diversify their economies beyond oil and gas.
A wave of infrastructure investments is also changing how brands and retailers can grow in the region. Notably, two of the region’s biggest fashion markets — the UAE and KSA — are expected to benefit from state-wide initiatives to boost tourism and sporting events in the region, alongside large-scale property developments enhancing the use of open public spaces.
Rawan Maki, Associate Director of Research and Analysis at The Business of Fashion, said: “The Middle East has long been a high-spend market for fashion brands but amid tougher conditions in other markets as well as a local openness to expanding the fashion industry overall, the region is becoming even more attractive for fashion and retail executives. To leverage this, executives need a new playbook that addresses the fast-evolving aspirations and expectations of their customers in the Middle East.”
Fashion in the Middle East: Optimism and Transformation is a new report published by BoF Insights, the data and analysis think tank at The Business of Fashion. Building upon its unparalleled industry access and knowledge, BoF Insights provides companies with in-depth research and analysis, executive briefings and training, and bespoke advisory services designed to support clients in answering their most critical business questions and solve for their most pressing challenges. The report consists of over 20 interviews with experts in the region, ranging from retail groups to brands and e-commerce platforms, proprietary consumer surveys in the two countries, as well as an assessment of pricing and assortments offered compared to geographies like the US and the UK.
