Kuwait’s retail market is underpinned by robust consumer spending. The emirate has one of the GCC’s highest gross domestic products (GDP) per capita, at more than $53,400, and was forecast to see economic growth of 6.3 per cent in 2012.

Salary increases

In 2011, the retail sector benefited from trickle-down spending, driven by a series of government-mandated pay hikes for nationals and a $5bn cash grant. The effects were felt again in 2012, following the retrospective payment of salary increases for public sector workers in June. The latest figures for point-of-sale transactions using credit or debit cards show KD1.3bn ($4.7bn) was spent in the third quarter of 2012. It marks a rise of more than 13 per cent on the same period in 2011.

Thanks to its high spending, Kuwait is a small but critical market for foreign retailers. Its 3.8 million population supports a number of luxury and high-street brand names, and the emirate’s increased urbanisation is driving the growth of organised retail. According to regional projects tracker MEED Projects, Kuwait has $1.36bn-worth of retail schemes at the design stage or under development.

The third phase of Kuwait’s largest shopping mall, The Avenues, opened in November, creating 90,000 square metres of leasable space for more than 400 shops. The extension cost in excess of $500m, according to local Mabanee Real Estate Company, and 85 per cent of the retail space was leased ahead of its launch. A further two phases of development are planned to take the mall’s total leasable retail area to more than 370,000 sq m. Other major shopping centres include 360 Mall, which opened in 2009 with 82,000 sq m of retail space, and the 31,000 sq m Marina Mall.

Kuwait has also profited from being the home market of one of the GCC’s largest retail franchise operators. MH Alshaya has more than 60 brands in its portfolio, including Starbucks, Harvey Nichols and Debenhams, and has debuted dozens of them in Kuwait.  

Alshaya has benefited from Western retailers looking to emerging markets to diversify their portfolios, particularly in the food and beverage sector. In the past year, Kuwait has seen the launch of US restaurant chains Cheesecake Factory and PF Chang’s.

Growth in the grocery sector has been slower. Kuwait’s top five retail chains control less than 11 per cent of the market, suggesting that unorganised retail still drives the bulk of grocery sales. Big chains are, however, making inroads. France’s Carrefour opened its first hypermarket in Kuwait in 2009, while Lulu Hypermarket operates five outlets.

In other sectors, retailers have faced difficulties. Kuwait is a conservative society and some outlets have struggled with restrictions on Western material. Virgin Megastore said in February it would be shutting its Kuwait operations, just weeks after record distributor Music Master said it would withdraw from the market.