In spite of its relatively small population, Kuwait has all the makings of a thriving luxury retail market. With GDP per capita among the highest in the world, spending power is consequently very high. This increased ability to purchase goods, combined with a young population that views shopping as a popular leisure activity in its own right, suggests there is major potential for the luxury retail segment.
OF GREAT OPPORTUNITY: The 2014 Knight Frank Luxury Retail Opportunities Index places the Middle East second only to Africa in terms of growth opportunities, accounting for 30% of predicted growth. Indeed, A.T. Kearney’s Global Retail Development Index (GRDI) ranked Kuwait in 8th place worldwide in terms of potential opportunities for global retailers. Among GCC countries, Kuwait placed behind the UAE (4th place) but ahead of markets such as Saudi Arabia and Oman (16th and 17th, respectively), and ahead of much larger emerging markets, such as Russia, Indonesia and India (12th, 15th and 20th, respectively).
Moreover, in its latest retail industry report, regional investment bank Alpen Capital forecast the market for personal luxury goods in the GCC to grow at a compound annual growth rate (CAGR) of 4.6% in the 2013-18 period, being valued at $9.4bn by 2018. In the GCC as a whole, fashion and accessories made up 40% of luxury purchases, items such as watches and jewellery for 35%, and beauty products (including perfumes) for 25%, according to the report.
PLACEMENT IS KEY: Working in tandem with Kuwait’s rising prosperity is the increase in the availability of dedicated retail space, which is opening up new opportunities for luxury retailers. The luxury segment in Kuwait has historically been well supplied, but over the past few years the amount of retail space available has increased significantly, as has the number of brands with a presence in the country.
The Avenues, one of Kuwait’s biggest malls, comprises 270,000 sq metres of gross leasable area, and consists of a number of zones that cater to different segments of the market. Of these, the “Prestige” section houses many high-end fashion brands, anchored by the upmarket British department store, Harvey Nichols, which opened a 10,000-sq-metre store there in 2012. The Avenues is also home to “The Souk”, which houses retailers selling traditional goods, such as oriental perfumes and traditional Arab dress, which can command a very high price at the upper end of the market. Other shopping malls, such as 360 Mall, also have dedicated high-fashion sections, home to houses such as Cartier, Prada, Jimmy Choo and Salvatore Ferragamo, while the Al Hamra Luxury Centre is home to brands such as Hermès, in addition to boutiques selling Arab scents and jewellery.
GROWING COUTURE: Kuwait is home to many major global luxury fashion brands, which – like all foreign firms – must partner with local retail groups to operate in the country. Alshaya, another local franchise group, holds luxury brands such as Harvey Nichols, Debenhams, while Habchi and Chalhoub hold brands such as Christian Dior, Fendi and Louis Vuitton. The local and regional luxury fashion and retail industry is also thriving in Kuwait. Brands in this category include Rasasi, an oriental fragrance brand founded in 1979 in Dubai, and Octium, a local jewellery brand founded in 2009, with stores in Kuwait and New York.
While average incomes in Kuwait have been rising steadily, supporting all segments of the retail industry in the country, the GCC has a whole is set to see an increase in the number of wealthy residents; according to Alpen Capital, the number of ultra-high-networth individuals (defined as people with more than $30m in assets) in the GCC is forecast to rise from 7052 in 2013 to 9498 in 2023, while the number of centamillioniares (that is, people worth over $100m) is set to rise from 1500 to 2044 and the number of billionaires in the GCC is to rise from 108 to 146 over the same period. This rise in the region’s number of ultrawealthy is likely to have a positive effect on the demand for luxury goods and services within the country.
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