MILAN — Bolstered by the government and fueled by a large under-40 population of spenders, Saudi Arabia’s fashion industry is getting ready to dominate its share of the global e-commerce market. A report sent to WWD by Saudi Ministry of Culture’s Fashion Commission said the nation is uniquely positioned “relative to China, the United States and Europe, who currently are the most prominent e-commerce markets globally.”
Titled “Saudi Arabia’s Fashion Frontier: e-commerce’s evolution and AI adoption,” the report was compiled from data that will be presented in November in the Kingdom of Saudi Arabia’s 2024 State of Fashion Report. The analysis was compiled by the Fashion Commission and was derived from public fashion retailers’ integrated annual reports, investor announcements, academic literature, market intelligence data, an online survey and stakeholder interviews.
One of the main reasons Saudi Arabia stands out from the rest of the world is its young population. About 65 percent of the population is under 40 years old. In comparison, the under-40 population of China, the United States and Europe is significantly lower, totaling 51 percent, 54 percent and 46 percent respectively. Another contributing factor is the nation’s Generation Z set born between 1997 and 2012 and Millennials born between 1981 and 1996 and who “are increasingly inspired by online influencers, purchasing products via social media platforms,” the report stated.
According to Statista, in 2023 the global fashion e-commerce market is said to have reached a value of more than $820 billion. By 2027, that could reach just over $1.2 trillion. Saudi’s fashion e-commerce market is predicted to reach $4.08 billion in revenue by 2027, which would represent a rise of 74 percent from $2.34 billion in 2023, the Fashion Commission’s report said, citing figures from Statista.
Omnichannel, online and physical retail leaders that dominate in Saudi Arabia, such as Chalhoub Group, Namshi, Net-a-porter, Alshaya, Ounass and KOJ (Kamal Osman Jamjoom) have made investments and established partnerships to broaden their e-commerce reach and deepen AI capabilities in the region. The report shines a light on emerging trailblazers like Taffi, a Saudi-based AI-powered fashion shopping platform that has used machine learning, ChatGPT and other generative AI applications to provide its users with styling recommendations based on their preferences, dress occasions and budget.
“The Saudi market, with its rapid growth and unique ecosystem, is poised to play a pivotal role in steering these global shifts,” the report concluded, outlining other specific initiatives currently underway.
Retailers in the Kingdom of Saudi Arabia are also partnering with logistics and delivery providers as they strive to decrease delivery times and streamline the delivery and returns process. For example, Saee, a Jeddah-based delivery service provider and logistics company, offers daily pick-ups from client warehouses and same-day delivery in Jeddah. Elsewhere, platform service providers have emerged to help small and medium-sized firms establish, operate and manage online stores.
On a government level, Saudi Arabia is implementing new e-commerce laws and trade policies to pave the way for supportive technical and logistical infrastructure. In 2021 the KSA already boasted the world’s second best 5G network and has also focused on reducing the wait for customs clearance.
In addition, the Financial Sector Development Program, which is aimed at forging a modern, innovative financial system that supports entrepreneurship and propels the private sector is targeting a 70 percent increase in digital payments by 2030. The report noted that an increase in digital payments is due in part to the domestic debit card Mada, which was launched by the Saudi Arabian central bank.
Tima Abed at Riyadh Fashion Week 2023
Courtesy Photo
The first official Riyadh Fashion Week was held under the bright lights of the city’s brand new King Abdullah Financial District, and Saudi Arabia’s Fashion Commission is forging ahead with its goals to develop a complete local value chain and build more categories around its fashion industry.
The total value of the fashion industry in Saudi Arabia reached SAR 92.3 billion ($24.6 billion) in 2021, with local fashion accounting for SAR 46.9 billion ($12.5 billion) in 2022, according to a quarterly report by the General Authority for Small and Medium Enterprises (Monsha’at). The cumulative growth of the fashion sector is expected to have risen by 48 percent between 2021 and 2025.