1. Growth of E-commerce, and FDI is allowing KSA to shift its focus towards non-Oil sectors and promote other sectors such as Tourism
Start-ups such as Mine Bags with innovative concepts for Bags are entering the Bags and Luggage Industry in KSA. Moreover, the construction of new malls like Mall of Saudi, City Center Ishbiliyah, and Mall at Yanbu and avenues by investors such as Nesma & Partners, Al Futtaim, and Lulu Hypermarket for retail outlet are promoting the bags and luggage market in the country. 55% of the population in Saudi Arabia belongs to the young age group (20-50 years) who are becoming fashion-conscious & foreseeing bags as a style statement than its functional aspect. Furthermore, the growing customer inclination towards bags with fingerprint locking, built-in GPS, Bluetooth speakers, and self-weighing scales is gaining traction in the country.
2. KSA Bags and Luggage Market generated $300 Mn in Revenue in 2020 due to Changes in Demographics, Consumer Preferences, and the Influx of new Brands into the market
The Saudi Arabia bags market consists of luxury and nonluxury bags sold online as well as offline channels fueled by changing demographics, surging the young and women population along with a high tourist influx into the Kingdom. It is an import-driven market where products are contract manufactured in countries such as China, Vietnam, Brazil, and Bangladesh and are directly imported into the Kingdom.
KSA luggage and bags market saw a dramatic decline in the historical period 2015-2020 owing to the global pandemic which led to a reduction in footfall to shopping malls and retail stores along with leisure and business travels decreasing significantly as consumers had to stay at home. This had a particularly detrimental impact on bags as many of these sales are either dependent on the tourist population or carried out on impulse. However, Companies are focusing on building an omnichannel strategy since the conventional brick-and-mortar retail business will follow a downward trend over the years with e-retailing exponentially growing to post the corona pandemic.
3. People of KSA are being aware of the fashion trends by Influencers and Bloggers trend, Online Marketing Techniques in KSA
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With the closure of malls due to COVID, online shopping has been a mental satisfaction or emotional release during house quarantine or self-isolation for unnecessary items, such as clothes & bags. Amazon even hired extra staff to keep up with worldwide demand. Moreover, young Saudi men are turning against traditional looks & following the latest fashion trends in clothes, accessories, and untraditional bags. Even fashion and style are also influenced by studying abroad for youngsters especially teenagers between 16 and 18 to have the courage to try out new things. Also, cultural change from being Islamic orthodox to rational changes have been brought by the new King of the Kingdom, Mr. Salman Abdul-Aziz. Changes include lifting the ban on driving by women and accessing basic rights, like education and healthcare, without permission from a male guardian. The independence has led to a positive impact on the bags & luggage market in KSA.
4. Marketing Cost such as Promotional Events with Celebrities, Social Media Campaigns and more have put an upward pressure on cost of the Product, lowering the margins
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Dubai is the shopping capital of luxury items in the MENA Region and experienced 5.0 Mn tourists in 2020, majorly from India and KSA. Due to yearly shopping festivals, super big malls by big investors such as Emaar promote tourism to provide a 30% Contribution to GDP in 2019. Moreover, for bags, there is intense competition with almost all global brands that have a presence in KSA. Additionally, marketing costs are there such as promotional events with celebrities, and social media campaigns which increase the overall cost. Furthermore, luggage and bags involve minute detailing, quality of the material, checking for any wear and tear, and ensuring the authenticity of the product. Hence, Online purchasing through E-commerce websites is less reliable and not much preferred by people in KSA.