Across the world, industries are closely monitoring the volatility in commodity prices, supply chain disruptions and inflation rates. Consumers around the world are re-evaluating portfolios, assets, and spending habits in anticipation of rising prices. These impacts, however, have not been felt as much by the luxury industry, particularly in this region. In fact, the last two years have seen dramatic growth in the appetite for luxury goods.
Here in the GCC, we are seeing a growing base of luxury customers, who are driving demand in the fine watches and jewellery categories.
Goldstein Research analysts say that the demand for luxury products remains robust in the GCC despite the global economic slowdown. The market is projected to reach $22.4bn by 2030 owing to increased international travel and the growing importance of millennial consumers.
Leading these trends is the UAE, which according to the World Bank, is among the most visited countries in the world, is a 7.96 percent increase in tourism in recent years. The UAE has carved out its position as a hub for luxury retail, establishing itself as a leading shopping destination for tourists and residents.
Furthermore, the UAE is a haven for high-net-worth individuals (HNWIs) and is currently home to the region’s second largest pool of HNWI. According to New World Wealth, Dubai’s population of HNWIs rose to 54,000 in June 2021, up by 3.8 percent from 52,000 in December 2020.
An appetite for the timeless and rare
This thriving melting pot of the wealthy and discerning, from all corners of the world, has given rise to an ever-growing audience of connoisseurs and novices alike, with a refined eye for luxury collectibles.
After 72 years in the business, and building longstanding relationships within the Swiss watchmaking industry, this is an audience that we have come to know intimately as we have nurtured their passion and curiosity over the years. As an ultra-niche consumer segment, with an impeccable eye for the unique and rare, the purchase of a watch means much more than simply buying a timepiece.
A watch is a work of art. A single watch can take up to three years or more to create as the mechanical function is carefully crafted with intricacy. Luxury watches, from one-off models to limited editions are widely coveted as it caters to the passion of collectors across the globe.
These exceptional masterpieces are so sought after that they can be a highly favoured investment choice, even more so than cars. This is increasingly common amongst the younger generation, who are looking to begin their collecting journey and are passionate about timepieces.
Thriving on rarity
The attraction towards timeless and unique timepieces drives the luxury consumer, a demand which we see growing in this region. This has given rise to a situation where the demand outweighs supply in the watch industry.
While our sources in the industry had predicted that the watch industry would crash in 2021, we are seeing the opposite. Watchmakers are working towards meeting the growing demand for luxury timepieces globally, as they learn to be agile during such unprecedented times.
We have managed to navigate the initial delivery disruptions caused by the pandemic, and the industry is now learning to adapt as they cater to their respective clients.
The rising commodity prices including gold, oil and diamonds have so far not affected watch prices directly, and while they may do so marginally in the event of continued commodity price rises, our approach remains aligned with those of Swiss watchmakers, which is to maintain price stability and ensure that the credibility of the industry is protected.
Can timeless charm exist in the metaverse?
Despite the inherent timelessness of the luxury watch sector, the industry is not entirely immune to disruption, and we continue to see much innovation. The pandemic sped up the movement of virtual purchases while the second-hand watch market saw rising prices, as cryptocurrencies and NFTs were explored as trading options.
Here in the UAE, as we emerged from the lockdown, it soon became apparent to us that luxury consumers value a sensory experience that trumps e-commerce only. Perhaps in the future the metaverse will replicate a virtual experience of touch, but for now physical interaction with luxury goods is extremely important in the region. It is currently viewed by many as a portal to attract the younger generation in the near future.
As we continue to explore the possibilities within the metaverse, brands will increasingly utilise such mediums to create brand awareness and retention; via interactive storytelling vs. focusing on physical interactions only.
Having said that, it is important to stay ahead of the curve, especially as this region sees a growing number of younger, wealthy individuals and families, including an emerging breed of WealthTechs, expecting greater alignment with innovation and technology. In this regard, we are focusing on an omnichannel approach to ensure that we evolve and adapt to meet changing needs.
The classic experience of walking into a store to touch and feel a piece that has been handcrafted for over a year or longer, and that will last for more than a lifetime, is very much alive and inherent in the psyche of our luxury consumer who, above all, values timeless rarity.