In particular, the brick and mortar channel saw a decline of 28% in the fashion market and a decline of 42% in the beauty market vs. the same period in 2019.
Despite the challenging market conditions, the Middle Eastern region seemed less impacted in comparison to the rest of the world, due in part to the dynamism of the local market and the local population being unable to travel to shop abroad. Another driving force was the ability of big players in the region to stay connected and service their consumers through WhatsApp sales, quick launches of online platforms, and digital content creation.
The top regional malls suffered the most from the global pandemic and the massive slowdown in tourism traffic. Particularly affected by a significant drop in the United Arab Emirates were those reliant on tourism such as Dubai Mall and Mall of the Emirates, with the exception of The Galleria in Abu Dhabi that gained 1 point in market share. Bahrain City Center was also affected by the lockdown and is no longer part of the top 10 malls in the GCC dropping in ranks from #8 in H1 2019 to #12 in H1 2020, similarly to Granada Mall in KSA that dropped from #7 to #11. On the other hand, the resilience of the Saudi Arabian market was reflected across its malls, especially in Riyadh with Centria moving up 2 ranks. A fast recovery was also noted in Avenues Kuwait, that was boosted by its phase IV end of March, and a strong resilience in Villaggio Mall, Kuwait with growing momentum over the rest of 2020.
THE FASHION MARKET
BRICK AND MORTAR
In the United Arab Emirates, the brick and mortar fashion market was heavily hit due to strict restrictions and lockdowns, and low consumer confidence was reflected in the shy recovery after re-openings. In Dubai, there was a low impact on domestic spending as many brands and retailers adopted clienteling strategies. Abu Dhabi, although smaller in size, performed better than Dubai.
In Saudi Arabia, the market saw a 4% decline, which is less dramatic than the rest of the region, as it was supported by an increase of domestic spending due to travel restrictions. In addition, the 10% VAT increase launched in July created a sales momentum in June.
Kuwait suffered from prolonged restrictions and delays in a return to “business as usual”. Many stores were still closed as of end of June. Bahrain also suffered from prolonged restrictions and the absence of Saudi consumers. Qatar, which had been on lockdown the longest, seemed less impacted than Kuwait and Bahrain as consumer appetite for luxury fashion remained strong, and clienteling was very efficient during lock down.
eCommerce saw opposite trends to the brick and mortar channel in the region; the more malls closed the better the online performance was, being also a testimony to local appetite for high-end fashion consumption.
Saudi Arabia dominated the online market as the largest with 38% market share and 77% growth, followed by the UAE that mostly grew due to the plethora of websites being launched during the pandemic. Kuwait, although not always considered a key country to open when launching an online platform, was very close to the UAE in size with 23% market share and 70% growth. While Qatar's shy eCommerce growth wasn’t enough to offset their poor brick and mortar performance.
THE BEAUTY MARKET
BRICK AND MORTAR
Similarly to the fashion market, the eCommerce channel showed an opposite trend to that of the brick and mortar, proving that the more malls closed the better the online performance was. This was also a testimony to local appetite for Prestige Beauty consumption. Established KSA players such as Goldenscent, Jollychic Souq or even Boutiqaat achieved positive growths in H1 2020 but grew at a slower pace than the overall GCC trend. Therefore, Saudi Arabia lost market shares to smaller but more dynamic markets such as the UAE and Kuwait.