KSA Luxury Goods Market Outlook to 2028

KSA Luxury Goods Market Overview

• The KSA luxury goods market is valued at USD 2.6 billion, based on a five-year historical analysis. This market is driven by a significant rise in disposable income, increased urbanization, and the cultural affinity for premium and branded products. Additionally, the expansion of retail infrastructure, including high-end shopping malls and luxury outlets, contributes to the market's growth. The influx of international tourists, who seek luxury shopping experiences, further supports the demand for high-end products.

• Riyadh and Jeddah are dominant cities in the KSA luxury goods market, primarily due to their status as economic hubs with a concentration of high-net-worth individuals (HNWIs). Riyadh serves as a political and financial center, fostering investment in luxury retail spaces, while Jeddahs proximity to key tourist attractions enhances its attractiveness for luxury brands. These cities host flagship stores of international brands, making them focal points for luxury shopping in the country.
• KSA's Vision 2030 has had a significant impact on the retail sector, emphasizing diversification and modernization. The program aims to increase the retail sectors contribution to the GDP, which stood at USD 75 billion in 2023, according to the Saudi Ministry of Economy and Planning. The focus on developing modern retail infrastructure and attracting international brands aligns with the goals of creating a more diversified economy. This initiative has led to a rise in luxury retail spaces and increased opportunities for global luxury brands to enter the Saudi market.

KSA Luxury Goods Market Segmentation

By Product Type: The market is segmented by product type into luxury apparel, luxury accessories, beauty and fragrance, high-end automobiles, and fine wine and spirits. Recently, luxury apparel has a dominant market share in the KSA due to the increasing demand for high-end fashion among affluent consumers and the presence of international fashion brands. The demand for exclusive collections and limited editions in apparel drives its popularity among the wealthy, making it the top choice among luxury shoppers.

By Distribution Channel: The market is further segmented by distribution channels into flagship stores, high-end department stores, online luxury portals, and duty-free stores. Flagship stores hold the dominant market share as they offer an immersive luxury brand experience, exclusive collections, and personalized customer service. These stores, often located in high-traffic urban areas of Riyadh and Jeddah, cater to the preferences of local and international clientele seeking authenticity and premium service.

KSA Luxury Goods Market Competitive Landscape

The KSA luxury goods market is dominated by a mix of international brands and niche players that cater to local tastes. The market's competitive nature is highlighted by the presence of flagship stores and regional headquarters for several top brands in Riyadh and Jeddah. These players maintain a competitive edge through tailored marketing strategies, brand exclusivity, and strong relationships with distributors and retailers.

KSA Luxury Goods Industry Analysis

Growth Drivers

• Rising Disposable Income: The Kingdom of Saudi Arabia (KSA) has experienced a notable increase in disposable income, with per capita income reaching USD 24,980 in 2023, up from USD 23,460 in 2022, as reported by the World Bank. This growth is attributed to improved economic conditions and government policies aimed at economic diversification under Vision 2030. The increasing disposable income enables consumers to spend more on luxury goods, fostering demand in the market. Additionally, the presence of High-Net-Worth Individuals (HNWIs) with assets worth over USD 1 million supports the growth of the luxury segment in the country.
• Increase in Tourism: KSA has seen a surge in tourism, with over 16 million international visitors in 2023, compared to 14.8 million in 2022, as per data from the Saudi Tourism Authority. This influx has boosted the demand for luxury products, as tourists, including High Net Worth Individuals (HNWIs), often purchase high-end fashion, jewelry, and other luxury items during their stay. The tourism sectors growth, driven by government initiatives like the Red Sea Project, is contributing to the expansion of the luxury goods market by increasing the consumer base beyond the local population.
• Cultural Shift Towards Global Luxury Brands: KSA's market has seen a shift in consumer preferences, with a growing inclination towards global luxury brands. This change is partially driven by younger consumers, who represent 60% of the population, and are increasingly influenced by Western fashion and lifestyle trends. With a median age of 32 years, as per World Bank data, the youths preference for high-end brands contributes to rising demand for luxury goods, including fashion, watches, and automobiles. This cultural shift, combined with a greater awareness of international brands through social media, is reshaping the luxury market landscape in Saudi Arabia.

Market Challenges

• Counterfeiting and Gray Market: Counterfeiting poses a significant challenge in the KSA luxury goods market, affecting the reputation and sales of authentic luxury brands. The Saudi Ministry of Commerce recorded over 45,000 cases of counterfeit luxury goods seized in 2023. This not only impacts revenue but also damages brand value among discerning consumers. Additionally, the presence of a gray market, where unauthorized dealers sell genuine products at lower prices, further complicates the market for official luxury retailers, as it creates unfair competition and pricing pressures.
• Cultural Sensitivities: Cultural sensitivities in Saudi Arabia can influence consumer preferences, particularly in the context of luxury goods. While there is growing interest in international luxury brands, a significant portion of the market remains loyal to local designs and products that align with Saudi cultural values. According to a survey by the Saudi General Authority for Statistics in 2023, approximately 40% of luxury consumers in the Kingdom prefer purchasing local luxury brands that reflect traditional aesthetics. This poses a challenge for international brands that must adapt their offerings to resonate with Saudi cultural norms.

KSA Luxury Goods Market Future Outlook

The KSA luxury goods market is expected to experience steady growth, driven by rising disposable income, increased urbanization, and evolving consumer preferences. The market's expansion is further supported by the Vision 2030 initiative, which aims to diversify the economy and boost tourism, bringing more affluent consumers into the country. Furthermore, the increasing digitalization of luxury retail, especially through online portals and e-commerce platforms, will play a crucial role in reaching a wider audience. The market is also witnessing a growing focus on sustainable and ethical luxury, appealing to environmentally conscious buyers.

Future Market Opportunities

• Growth in E-Commerce for Luxury Goods: The e-commerce sector in Saudi Arabia has expanded rapidly, with online retail sales reaching USD 8.5 billion in 2023, as reported by the Saudi Central Bank. This growth includes a rising demand for luxury goods through digital platforms, as consumers seek convenience and a wider variety of products. Major luxury brands are establishing their online presence and collaborating with local e-commerce platforms to tap into this expanding market. The increasing adoption of digital payment methods, supported by a young, tech-savvy population, is further driving the shift towards online luxury shopping.
• Expansion of Luxury Experiences: KSA's luxury market is expanding beyond products to include high-end experiences. The Red Sea Project and the Diriyah Gate development are examples of luxury hospitality and tourism initiatives that have boosted interest in fine dining, luxury resorts, and bespoke travel experiences. In 2023, luxury hospitality revenues in the Kingdom reached USD 2 billion, as reported by the Saudi Tourism Authority, driven by affluent tourists and locals seeking exclusive experiences. This trend presents opportunities for luxury brands to collaborate with these developments and provide a holistic luxury lifestyle offering.