Exorbitant items in demand, even in tough times

Dubai During the dark days of the recession, many UAE consumers decided to cut the cloth, but there were certain indulgences they could not afford to let go of.

Between 2005 and 2010, when many people were saddled with debt and flirted with bankruptcy, locals and expatriates continued to splurge on luxury mobile phones, jewellery, timepieces, cars and spirits. Among the most coveted brands were Vertu and Porsche Design, Cartier, Burberry, Boucheron, Moet & Chandon, and Dom Perignon.

According to a recent report by Euromonitor International, overall sales of luxury goods in the UAE dropped by almost 13 per cent over the five years to 2010, which equates to a reduction of Dh1.2 billion on 2005 levels. This was partly because consumers scrimped on designer clothing and footwear, and luxury travel goods, among other things.

Tech gadgetry

However, tech gadgetry was a must during the downturn. Luxury electronic gadgets quickly disappeared off the shelves between 2005 and 2010, and sales registered an "impressive" 75 per cent growth. Residents spent a fortune on luxury spirits, as well, with expensive French brands such as Veuve Cliquot, Moet and Perignon leading the table.

Penchant for ornaments

Both men and women were eager to part with their money just to buy luxurious ornaments. In 2010, women's items accounted for nearly half of jewellery and timepiece sales. Men, however, showed a bigger appetite for bling. Men's luxury watches, for instance, grew by 13 per cent in real value terms between 2005 and 2010, Euromonitor says.

Dr Joerg Breuer, managing director for BMW Group Middle East, says that the automotive market did face a couple of challenging years, particularly during the 12 months following the recession, but consumers still have a strong desire for luxury vehicles. Across the Middle East, the company's sales climbed six per cent, which shows that people are still in the market to buy expensive luxury brands.

"The economic environment still has not returned to what it was before the recession. Consumers purchasing expensive products tend to remain more cautious in their purchasing decisions. However, despite this mindset, they are still [buying]," Breuer says.

Will Stein, president of Philip Stein Group that markets watches that cost around $1,000 (Dh3,678) — enough to pay a month's rent — also cites a significant increase in their business over the past months in the UAE compared to a year ago.

Investing in quality

While UAE residents continue to indulge in luxury gadgets, spirits and jewellery, consumers across the globe are increasingly eager to spend money on things of high quality and last longer.

According to the latest Global 500 study by Brand Finance, which specialises in brand and intangible assets valuation, the global downturn has produced a new breed of "alphabrands" which consumers turn to for quality, regardless of the economic situation.

As a result, major makers of high-quality, cutting edge design and couture such as Louis Vuitton, Hermes and Polo Ralph Lauren posted significant profits. Brand values of Rolls-Royce, Daimler, BMW, Apple have likewise increased.

"While the world remains shrouded in economic misery, people are investing their hard-earned cash in brands they feel they can rely on to produce quality, long lasting products," David Haigh, CEO of Brand Finance, says in a press release.