LUXURY'S NEW ERA: TRENDS, CHALLENGES, AND OPPORTUNITIES

The luxury industry, a perennial reflection of societal values and economic currents, experienced another transformative year in 2024. From shifting consumer behaviours to seismic changes in leadership and product strategies, this year offered a compelling glimpse into the future of luxury.

Evolving Consumer Behaviors

Luxury customers are no longer defined merely by affluence; their purchasing habits have become increasingly complex and values-driven. In 2024, a notable shift emerged towards investment in timeless, sustainable pieces. The desire for authenticity, craftsmanship, and ethical practices has reshaped the narrative of exclusivity. Millennials and Gen Z, who now account for over 60% of luxury consumers globally, continue to prioritize experiences over possessions, driving growth in categories like bespoke travel, wellness, and niche perfumes.

In the Middle East, the luxury customer remains a global market powerhouse. Cities like Dubai and Riyadh have become key hubs, with younger, digitally savvy consumers influencing trends. These buyers are drawn to brands that merge global prestige with local cultural relevance, as seen in collaborations highlighting regional art and heritage. Brands such as Chalhoub Group’s Tanagra, Bahrain’s Perla Jewellery, and Dubai’s Al Fardan Jewellery exemplify this blend of tradition and modernity.

Al Fardan Jewellery

The Creative Carousel

The revolving door of artistic directors in luxury fashion has reached new velocity in 2024. Brands like Gucci, Louis Vuitton, and Balenciaga have welcomed new visionaries, underscoring the industry’s constant drive to stay culturally relevant. While some of these appointments have brought critical acclaim, others highlight the risks of overhauling brand identity too frequently.

This year also saw the rise of new brands entering segments like sustainable jewellery, the high-tech luxury, and vegan leather goods. Examples include Hermès’ venture into plant-based leather accessories and the debut of emerging players like UAE’s fine fragrance brand Hind Al Oud and Qatar’s luxury abaya designer Toujouri. These challengers often stand out not just for innovation but for aligning with the zeitgeist of climate consciousness and digital transformation.

Hermès’ venture into plant-based accessories.

Technology: The New Luxury Frontier

The integration of technology into luxury accelerated further in 2024. From digital collectables and virtual reality boutiques to AI-driven personalization, luxury brands embraced tech to engage with their audiences. Gucci and Burberry led in metaverse activations, while smaller labels experimented with blockchain-backed authentication for greater transparency.

In the Middle East, adopting digital-first strategies has been particularly robust. E-commerce platforms like Ounass and Farfetch expanded their presence in the region, offering curated experiences that cater to the tech-savvy luxury consumer. Meanwhile, luxury conglomerates collaborated with local governments to enhance retail tourism through augmented reality experiences in key destinations. Local innovators, such as Dubai’s Threads app, are also redefining the online luxury shopping experience.

Dubai’s Threads app

Sustainability: From Talk to Action

Sustainability in luxury moved from being a marketing buzzword to a fundamental part of brand operations. Positive Luxury’s ESG+ framework has become a benchmark for leading businesses. In 2024, we saw more brands obtaining certifications for carbon neutrality and expanding into circular fashion through resale and rental services. LVMH and Kering led initiatives for reducing supply chain emissions, while independent labels innovated with bio-fabricated materials.

The GCC region’s luxury sector also made strides in sustainability. Governments and private stakeholders collaborated to promote green initiatives, aligning with global standards while leveraging local expertise. For instance, Saudi Arabia’s NEOM project is integrating luxury retail with futuristic sustainable infrastructure, while UAE brands like The Giving Movement are championing local sustainable production. This dual approach—sustainability rooted in regional pride—is expected to redefine the Middle Eastern luxury market in 2025.

I had the pleasure of attending the guest lecture delivered by Diana Verde Nieto on sustainability in the luxury industry at the American University of Sharjah with students studying Luxury Brand Management. This course, established by the Chalhoub Group and led by Professor George Christodoulides, exemplifies the synergy between academia and industry. I was truly impressed by the students’ involvement in the conversation, their understanding of the industry from regional and global perspectives, and their ability to ask the right questions. They are the future of this industry. How great an initiative it is from the Chalhoub Group to educate the future generation and potential team. Since 2013, already 500 students have graduated from this program.

The Giving Movement are championing local sustainable production.

Reassessing the Price-Value Equation

Steep price hikes in the luxury sector have put pressure on the value proposition of major luxury brands. In 2024, this trend contributed to a notable downturn in demand for luxury megabrands, as customers began to question whether the price increases matched the perceived value of the products. Brands like Chanel and Hermès, known for their aggressive pricing strategies, faced challenges balancing exclusivity with accessibility.

Smart executives are recognizing the need to rebalance this price-value equation—and fast. Strategies such as offering entry-level products without compromising brand prestige, enhancing customer experiences through personalized services, and investing in storytelling are becoming essential. The shift toward a more value-driven luxury market suggests that pricing strategies will be a critical area for innovation in 2025.

Key Metrics for 2024

Globally, the luxury industry reached an estimated market value of $350 billion in 2024, reflecting a steady annual growth of 6%. The Middle East and GCC luxury market contributed approximately $55 billion to this figure, with the UAE and Saudi Arabia driving over 60% of the regional spend. This underscores the region’s role as a key player in shaping global luxury trends.

Key Lessons from 2024

1. Cultural Relevance is Critical: From creative direction to product launches, brands that fail to resonate culturally risk irrelevance.

2. Local Insights, Global Vision: Understanding regional nuances while maintaining global appeal proved a winning formula, particularly in the Middle East.

3. Purpose and Authenticity Win: Brands that stand for something beyond profit are thriving, whether through sustainable innovation or supporting meaningful causes.

What’s Next for 2025?

The coming year promises further transformation:

• AI-Led Creativity: As AI tools evolve, they may influence not just marketing but also product design and storytelling.

• Regional Dominance: The Middle East’s influence on global luxury trends will grow, driven by events like Expo Riyadh and sustained investment in cultural diplomacy.

• Resilient Luxury: Amid economic uncertainties, the industry’s ability to balance heritage with innovation will determine its path forward.

Luxury in 2025 will be defined by its ability to navigate this delicate balance—between timelessness and reinvention, exclusivity and inclusivity, tradition and technology. The question is not just what comes next, but who will lead this evolution.