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Luxury Adapts to the ‘New Ramadan Rush’

Brands like Dior, Fendi and Valentino have responded to shifting travel patterns as some Middle Eastern customers return to familiar hubs in Europe but others choose to shop closer to home or explore new destinations during the Muslim holy month.
Some Middle Eastern tourists are returning to Europe during the sales period linked to the Muslim holy month, but others are shopping closer to home or travelling to new destinations.
Valentino was one of many global luxury brands to release a dedicated Middle East exclusive collection for Ramadan this year. (Valentino)
  • Rohma Theunissen

Key insights

  • A spike in demand across markets like the UAE, Saudi Arabia and Kuwait is expected after three years of subdued Ramadan season activity during the pandemic.
  • Brands can better respond to local demand this season after upping their game across Gulf retail outlets and investing more in local marketing, capsules and events.
  • Europe will remain popular for Arab consumers travelling this season but newer destinations in Southeast Asia, Eurasia and North America are also gaining traction.

Ramadan 2023 is the first time Muslims have been able to fully resume social activities without the hinderance of Covid-19 restrictions. The month-long religious and festive period, which started on Mar. 21 and is expected to conclude on Apr. 20 ahead of the Eid-al-Fitr holiday, sees friends and family gather to break their fast at iftar and socialise until the suhoor meal at dawn. In many countries around the world, it is also a busy time for retailers.

“Ramadan [in Gulf markets across the Middle East] is comparable to Christmas in Europe. It is, by far, the most important month in the annual retail calendar, with sales surpassing even that of December’s high season,” said Patrick Chalhoub, group president of Chalhoub Group, on the significance of the Islamic holy month for fashion brands and retailers in GCC countries (members of the Gulf Cooperation Council, namely Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman).

The leader of Chalhoub Group, a partner across the GCC region for some of the world’s largest luxury brands including Louis Vuitton and Christian Dior, seems confident that business will rebound during this year’s Ramadan period after relatively subdued holiday spending throughout the pandemic. This chimes with analysts’ expectations.

“The high-net-worth consumer (US dollar millionaires) will continue to spend on luxury [during Ramadan],” said Akshay Jayaprakasan, associate partner at Redseer Strategy Consultants. “Gifting and fashion will see an uptick as people go out to meet friends and family this year. These two categories will feed into overall luxury demand, with entry level products within the category gaining more traction this month.”

‘Revenge Travel’ During the ‘New Ramadan Rush’

Pre-Covid, European fashion hubs such as London, Paris and Milan were the go-to shopping destinations for wealthy Gulf consumers looking to shop around the season. Dubbed the ‘Ramadan Rush’, the annual influx before, during and after the holy month marked one of the most important events in the European shopping calendar.

“International travellers are a key element of the European luxury market, representing approximately almost 50 percent of the overall luxury sales, with GCC consumers [from the Middle East] ranking second amongst the top spenders’ category in 2019, after Chinese and before Russians and American tourists,” said Stefanie Lazzaroni, general manager at the Altagamma Foundation, an association of major Italian luxury brands which includes Gucci, Valentino and Bulgari. “This was, of course, before Covid restrictions drastically impacted the travel and tourism industries,” she added.

Homegrown brands such as The Giving Movement compete with international players to capture a share of the GCC Ramadan fashion spend.

After two years of severe restrictions, tourists from the region started making a comeback in 2022. Data from international tax refund company Global Blue shows that while sales from Gulf state tourists in the UK in 2022 were only back to 65 percent of 2019 levels, those in France and Italy achieved more than three times those levels, at 198 percent and 166 percent, respectively. British retailers attribute the gap to the axing of sales-tax-free shopping for overseas visitors, a policy introduced following the country’s exit from the European Union.

“GCC travel picking up again [in Europe] could be a game-changing element for us,” said Lazzaroni. “The luxury market back in the Gulf region is in excellent shape, outperforming pre-Covid benchmarks.”

However, EU countries will have to compete with other popular destinations among GCC tourists. As reported by Arab News last year, research from Dubai-based consumer insight company D/A confirms that the UK, the US and Thailand remained extremely desirable, but nature-based and resort-based destinations in scenic settings like Switzerland, the Maldives and the Turkish Riviera continued to draw experience-seekers from the Gulf region.

These preferences are expected to continue among some Gulf travellers in 2023, suggesting that local airports and through-cities like Zurich and Istanbul could also capture a greater share of spending as tourists touch down for a spot of shopping before moving on to their ultimate destinations. Tourism hotspots in the wider Islamic world like Malaysia and Morocco are likely to remain popular too.

But what about those who decide to travel domestically, within the region or remain at home for the Ramadan period?

Local Investments Boost Local Spending

Pre-Covid, an estimated 30 to 40 percent of luxury purchases by GCC nationals were made outside the region, according to Bain & Company. The closure of travel routes during the pandemic saw the repatriation of much of this spend back to the Gulf after local retailers overcame initial challenges and adapted to the new Ramadan market reality. It is not yet clear how permanent this shift will be or what proportion of spending will revert to overseas stores.

The Fendi Majlis in Abu Dhabi is a month-long Ramadan activation that welcomes guests to experience iftar and suhoor meals in a traditional, locally-inspired Arabic setting.

Travel is certainly top-of-mind for GCC residents and nationals this year, with travel sites such as Wego and Skyscanner reporting increased searches and bookings for flights during Ramadan. Jetex, a leading provider of private charter flights in the GCC, also confirms a rise in demand during the period within markets such as UAE and Saudi Arabia in comparison to previous years.

But local fashion executives such as Patrick Chalhoub are unconcerned by the surge in GCC outbound travel during the Ramadan season.

“People from this region typically tend to travel a lot more than those living in other parts of the world,” said Chalhoub. “But because the cost of travel has become so much more expensive [in recent years] with prices doubling or tripling across airlines and hotels, it is bound to impact the spending power of the travelling consumer, who will undoubtably have a smaller share of wallet to spend on shopping abroad.”

Given the nature of these dynamics, the localisation of Ramadan spending is likely to be more pronounced outside the Gulf in certain Muslim-majority markets in regions like Southeast Asia, South Asia and sub-Saharan Africa. A variety of spending patterns could emerge among Muslim communities in Europe and North America.

In the Middle East and North Africa (MENA) region, overall retail spending in this year’s lead-up to Eid-al-Fitr is predicted to hit $66 billion, effectively surpassing the 2019 pre-pandemic benchmark of $53 billion, according to estimates by Redseer Strategy Consultants in their annual pre-Ramadan report. The study cites inflation as a key driver for this year’s $5 billion uplift on 2022 spending levels, with real year-on-year growth remaining relatively flat. However, sectors like luxury will be less affected by inflation.

In the Gulf, experts cite the recent development and refinement of local market supply and offering in response to Covid constraints as reason luxury consumers are likely to continue shopping locally during Ramadan, irrespective of travel plans.

“We have seen a lot of luxury brands setting up warehouses in the UAE, working with local logistics partners to ramp up supply and meet local demand. As a result, the market now houses a more extensive luxury product offering year-round,” explains Akshay Jayaprakasan. “While exclusive items in segments like apparel may still pique the interest of international shoppers when they travel to Europe, we anticipate a strong trend in local luxury shopping among affluent cohorts.”

Myf Bagnold sees a similar pattern emerging in Saudi Arabia, where he serves as chief marketing officer at Cenomi Retail (formerly the Alhokair Fashion Retail unit of Fawaz Abdulaziz Alhokair Co.), a leading retail group in Riyadh with a diverse portfolio comprising partnerships with more than 95 lifestyle and fashion brand such as Zara and Estée Lauder.

Al Tayer Group’s Bloomingdale’s ‘Here and Now’ 2023 Ramadan campaign features a seasonally-inspired edit of luxury fashion and home décor items.

“Because of the transformation and changes that have taken place [in recent years], every aspect of the shopping experience in Saudi Arabia is so much better, and the range of international brands available locally is far greater than anything we have seen historically,” observed Bagnold. “So yes, whilst a lot of people are travelling this year and are shopping on holiday, the bulk of their Ramadan purchasing is still happening within Saudi Arabia.”

Another factor contributing to the growing interest in local shopping can be attributed to the ongoing maturation of local fashion talent and the increased breadth and calibre of their offering. Locally based brands such as Taller Marmo and L’Afshar, and homegrown designer favourites Bambah, Abadia and Dima Ayad, resonate with local consumers by delivering desirable design that also taps into growing national or regional pride.

Localised, designer-led shopping events are also seeing a comeback amid a resurgence of dedicated Ramadan- and Eid-focused fashion exhibitions and trunk shows which offer shoppers the chance to buy curated collections from local labels as they socialise with family and friends.

This year’s highlights include Tasyourah, the annual pre-Ramadan lifestyle shopping event by Dubai-based multi-brand retailer Symphony (whose ultimate parent company is Alabbar Enterprises), Sawa’s community-driven Ramadan retail pop-up featuring over 100 Middle Eastern designers at Dubai World Trade Centre, Saudi 100 Brands Ramadan fashion retail exhibit in Riyadh and Boulevard One’s exhibition in Downtown Dubai which included collections from more than 75 South Asian designers.

Ramadan Activations Set the Tone for the Year

Spending by affluent Gulf consumers this Ramadan season is expected to spike from an already strong baseline.

In Saudi Arabia and the United Arab Emirates, which together comprise approximately 50 percent of sales in the Arabic-speaking subregion of the wider MENA region, as much as 50 percent of high earners (those with an annual household income of $75,000 or more) spend over $1,000 on average a month on fashion throughout the year, according to a survey for a recent BoF Insights report on the Middle East.

Dubai-based designer Rami Al Ali held an intimate suhoor event at his home at the start of Ramadan.

For the luxury industry’s biggest spenders who earn far more, nothing is likely to thwart the release of pent-up demand this season and beyond.

The general outlook this year for the Middle East is more bullish than for many other regions. The GCC luxury market was already worth nearly $10 billion in 2021 — a 23 percent increase on pre-pandemic levels — and is expected to grow to $11 billion in 2023, according to the latest State of Fashion 2023 Report by BoF and McKinsey & Company.

Given the recent repatriation of luxury spending and the optimistic outlook, international players are heavily invested in growing their local retail revenues and footprint across leading malls.

“In the first three months of 2023, we have recorded 30 percent [year on year] growth in revenue across our brands with double-digit increases across all markets [and] we anticipate [the strong upward trend] to remain,” said Fahed Ghanim, chief executive officer at Majid Al Futtaim Lifestyle, the fashion retail division of Majid Al Futtaim, Dubai-based a conglomerate with a portfolio of 29 popular shopping malls across the MENA region including the Mall of the Emirates, the Mall of Oman and the Mall of Egypt.

Ghanim, who oversees the operations of brands such as Lululemon, All Saints and Hollister across the region as well as homegrown multi-brand retailer That Concept Store, added that the Ramadan period “is a chance to offer regional customers a new value proposition, opening up additional opportunities in the long run.”

Sawa’s community-driven Ramadan retail pop-up event at the Dubai World Trade Centre featured collections from more than 100 Middle Eastern designers.

Traditionally a period dedicated to family and social gatherings, Ramadan in the Gulf now comprises a seemingly limitless schedule of commercial activations and events from brands across many sectors including fashion. From extravagant iftars and suhoors created or presented by the likes of Dior and Moynat to intimate home gatherings by regional designers such as Rami Al Ali, brands are competing to capture the luxury consumer’s attention.

“Judging strictly by the volume of exclusive campaigns, curated collections and Ramadan-related events, there is a renewed interest in regionalisation post-Covid restrictions,” confirmed Rani Ilmi, founder of Dubai-based luxury communications consultancy Frame Publicity which represents clients such as Matchesfashion, Etro and JW Anderson.

“The A-Z of luxury brands collaborated with Arab talent and creatives this year — from Mandarin Oriental and Jo Malone to Vacheron Constantin and Bulgari. They understand the significance of the holy month of Ramadan in the GCC and are keen on creating tailored experiences that resonate with the local culture and traditions.”

On the product front, the concept of releasing a dedicated Ramadan collection has now evolved into a mainstream marketing strategy. Patrick Chalhoub estimates that 60 to 70 percent of luxury brands are committed to releasing regionally exclusive, limited-edition collections to commemorate the festive month.

From Brunello Cucinelli’s exclusive abaya capsule and Gucci’s ‘Nojum’ collection, to Christian Louboutin’s Fawazeer Ramadan collection and Louis Vuitton’s first-ever ready-to-wear Ramadan capsule, global brands have appealed to affluent GCC shoppers in recent years with increasingly sophisticated product portfolios that cannot be found outside the region.

International luxury e-tailers are also heavily invested in catering to the regional consumer through dedicated seasonal edits and campaigns. The focus on exclusivity is partly being driven by the competitive VIP offering, assortment and last-mile delivery services offered by powerful local e-commerce players such as Al Tayer Group’s Ounass and regional arm of Bloomingdale’s, which offer home delivery in as little as two hours within certain GCC markets.

From Net-a-Porter’s Ramadaniyat campaign and Farfetch’s dedicated modest wear capsule, which features exclusive styles from more than 20 Middle Eastern and international designers to Mytheresa’s collaborative seasonal edit with Saudi influencer Nojoud Al-Rumaihi, it is evident that Ramadan has become big business for global brands.

At the same time, fashion players have finally recognised that they sometimes need to take a hyper-local approach to Ramadan activations across the GCC.

Van Cleef & Arpels’s artistic Ramadan Nights window concept was created in collaboration with French artist Charlotte Gastaut especially for the Middle East.

Moving away from the traditional pan-GCC approach of the pre-pandemic era, this year’s Ramadan season has seen a redistribution of marketing efforts across the region, from Dior’s Ramadan pop-up in Kuwait City and Fendi’s suhoor in Abu Dhabi, to Van Cleef & Arpels’ private client suhoor in Doha and Givenchy’s home takeover in Riyadh.

“There has also been a rise in Ramadan events hosted by luxury brands in Doha, who are taking an increasingly active approach to engaging with consumers on a more personal level [in the market],” said Bianca Bonomi, director of Harper’s Bazaar and Esquire Qatar. “In terms of Ramadan collections, we continue to see a wide variety [from fashion and luxury brands] but these are now being fine-tuned to the market to reflect Qatari aesthetics more closely.”

For brands venturing outside the highly saturated UAE market during Ramadan, the effort seems to be paying off. “The new programming of events across cities such as Jeddah, Riyadh, Doha and Kuwait City is converting well,” confirms Ilmi. “These past-ignored markets are appreciating the brand acknowledgement they’re now receiving.”

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