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Saudi Arabia is putting in motion its plan to transition away from oil dependency, with the retail industry being a key player in that transformation. This means luxury brands — who have cautiously navigated the market due to political and social tensions — are paying more attention.
According to Together Group’s “New Codes of Luxury in Saudi Arabia” report, the region is entering an era ripe for innovation, with the goal of developing a major luxury market defined both by its ties to the international industry and its local identity.
“I want it to be the number one luxury market in the world — to really be leading,” says HH Prince Bandar bin Khalid Al Saud, a high-ranking royal and businessman, in the report. “We have what it takes: I don’t think we lack the will, and I don’t think we lack the imagination or the ambition.”
Luxury brands are already looking to the wealthy Saudi consumer as a key demographic to drive growth, spurred in part by Vision 2030, announced in 2016 by Saudi Crown Prince and Prime Minister Mohammed bin Salman to diversify Saudi Arabia’s economy. One of its pillars is to create one million jobs in the retail and trading industry, aided by the ease of foreign restrictions, through which global companies can now invest in the retail sector with 100 per cent ownership, up from 75 per cent previously. “There is no doubt that Saudi Arabia’s global presence has skyrocketed in the last couple of years,” says Hind Ali, a consultant at Euromonitor International.
The report, which will be released in the coming weeks, aims to spotlight “the innovation and trailblazing ideation happening in the Kingdom that the world can learn from”, says Ada Renedo, regional CEO of Together Group (the collective of creative consultancies, technology and production studios, which shares a network with The Future Laboratory, opened an office in Riyadh in 2023). For the report, Together Group polled 500 adults aged 18-plus in Saudi Arabia with a household income of SAR500,000 ($133,333) or more for primary findings. They also conducted in-depth interviews with regional key opinion leaders.
Catalysts of change in Saudi Arabia
To truly comprehend the dynamics of the Saudi market, it’s pivotal to understand the changing role of women. Vision 2030 has introduced social changes for women across the Kingdom, impacting both the workforce and societal norms, with spending power expected to increase. Women’s rights have always been a source of concern; for example, Saudi’s ban on female drivers was intact until 2017. Slowly, women’s rights are taking centre stage, with particular emphasis on the job market. According to Euromonitor, which released its own report “Luxury in Saudi Arabia: The Story of Unlimited Opportunities” last March, the female employment rate in Saudi Arabia grew from 21.4 per cent in 2018 to 28.5 per cent in 2023.
Female buying patterns and consumer preferences are evolving in step. Contemporary brands, ready-to-wear fashion and athleisure have gained traction, aligning with the Ministry of Sport’s efforts to increase physical-activity levels. Customers also expect to see support from luxury brands: Together’s report found that 88 per cent of Saudi nationals believe luxury brands should actively contribute to women’s empowerment through their business practices. Though the report makes no suggestions on how this should be done, appointing women in key leadership positions would set a strong precedent.
The Kingdom stands out as an exceptionally youthful market, with 63 per cent of its population below the age of 30, according to 2023 census data cited in the report. This demographic relies heavily on social media, particularly Snapchat, for information. National pride is an essential factor, with a significant portion preferring European or Western luxury brands but emphasising the importance of localised collections, especially for occasions like Ramadan. Forty-four per cent of the 18 to 34-year-olds surveyed by Together Group said they prefer European or Western luxury brands, compared to 24 per cent who prefer local names. This group also shows a preference for luxury experiences, membership clubs and fine dining.
“Luxury fashion brands that resonate and collaborate with the government to promote culture and heritage have an opportunity to appeal to consumers,” says Amna Abbas, senior consultant at Euromonitor International. “They can also fit with different stages of consumer life, such as purchasing during occasions like weddings, where hard-luxury items purchased are carried through generations.”
Redefining luxury: Experiences and technology
This is a market that likes to be pampered. Together found that 91 per cent of Saudis surveyed valued convenience, while 90 per cent emphasised the importance of personalisation.
Digital methods are the preferred mode for luxury purchases, with an expectation of swift deliveries within two hours. Luxury brands are increasingly becoming curators of exclusive, “money-can’t-buy” moments for their top clients, like private events. Tourists, too, will expect experience-driven services. As regional expert Abbas says, “Offering premium services provides higher consumer satisfaction over the long term, including among the wealthy tourists.”
Stretching beyond traditional luxury product categories, there’s a notable shift towards health and well-being in Saudi Arabia. Beauty, in particular, is a top-spending category for Saudi women, with 89 per cent looking for products or services that promote health benefits or boost overall well-being. Saudis are actively seeking brands aligned with their values, such as halal, sustainable and cruelty-free products, signalling a broader integration of health into the luxury narrative. Wellness also plays a key role in domestic tourism, as Saudi Arabia looks to build itself as a global wellness spot.
When asked what elements define modern luxury, the report shows that Saudis are most likely to opt for innovation and cutting-edge design (51 per cent). One of Saudi’s latest luxury multi-brand destinations, Mwaz, has heavily considered the importance of experiences, with holograms and AI incorporated into the in-store fashion experience.
Being a young, tech-driven and dynamic market that is high-spending and craft-conscious, this is a market that luxury brands need to keep a close eye on. As one that is still building itself, there is an opportunity for luxury brands to prove they understand how to connect with its consumers.
The report concludes: “The real opportunity is for those who not only view Saudi Arabia as a key market for selling their luxury products and services, but who are also ready to engage in the region to support the visionaries and ambitious entrepreneurs co-creating the new codes of luxury in Saudi Arabia from the inside out, rather than from the outside in.”
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