BMI View: Kuwait's oil-dependent economy is facing a notable slowdown, following a recent drop in global oil prices. This is negatively affecting business and consumer confidence levels, forcing households to re-allocate their spending priorities on essential goods and services. We believe that e levated inflation, triggered by removal of fuel subsidies and persisting housing shortages, will continue weighing on consumer spending power over the coming quarters.
Key Updates and Forecasts
Total household spending in the retail sector is expected to average 4.0% per annum during 2016-2020. Except for housing and utilities sub-sector, all other spending categories will see their shares declining in terms of overall household expenditures over the next five years.
Household expenditures will shift towards essential goods and services, with spending on housing and utilities leading the way. Despite relative affluence of the Kuwaiti population, we believe that essentials will account for nearly three quarters of total household spending by the end of 2020.
The share of households earning above USD10,000 will remain at around 80% across our forecast period to 2020.
In early 2016, US-based department stores retailer Macy's revealed that it will open a 93,000 square feet Bloomingdales outlet at Kuwait's 360 Mall in spring 2017. The company has signed a strategic partnership agreement with the UAE-based Al Tayer Group.
In March 2016, Paris-based luxury fashion retailer Karl Lagerfeld opened its first 75 square metre concept store at Avenues Mall in Kuwait.
|Headline Household Spending|
|e/f = BMI estimate/forecast. Source: BMI, Central Statistics Bureau Kuwait|
The Kuwait Retail Report has been researched at source and features BMI Research's independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.
BMI's Kuwait Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.
- Benchmark BMI's independent retail industry forecasts for Kuwait to test other views - a key input for successful budgeting and strategic business planning in the Kuwaiti retail market.
- Target business opportunities and risks in Kuwait through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, plus a discussion of major industry developments and a snapshot of key short-term demand-driving macroeconomic movements.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the retail sector and within the broader political, economic and business environment.
BMI Industry Forecasts
There are four separate 5-year forecast modules in the retail reports. These are:
- Headline Retail Forecast: Total household spending (local currency and USDbn, % growth, % GDP, per capita, per household), spending by retail sector (food & non-alcoholic drink, alcoholic drink, clothing & footwear, housing & utilities, furnishings & home, health, transport, recreation, education, restaurants & hotels, personal care & insurance (local currency and USDbn, % growth, % GDP, % of total spending)
- Retail Sector Forecast: Breakdown of Food, Non Alcoholic Drink, Alcohol, Tobacco, Clothing, Footwear, Household Goods, Furnishings, Appliances, Glass and Tablewear, Household Textiles, Consumer Electronics, Garden Toys and Pets, Home and Garden tools, Personal Care, Personal Effects Spending (USDbn, % Growth)
- Household Income and Numbers Forecast: Number of Households (‘000, % growth); gross income per household and per capita; net income per household and per capita; tax and social contributions per capita; breakdown of household incomes – USD5000+, USD10,000+ USD50000+ (‘000, % of total); labour force, employment and unemployment (‘000, % change)
- Demographic Forecast: Total population; Babies 0-12 months; Young Children 0-4yrs; Children 5-9yrs; Young Teens and Older Children 10-14yrs; Older Teens 15-19yrs; Adults 21yrs +; Young Adults 21-29yrs; Middle Aged 40-64yrs (‘000, % growth, male, female); Urban Population (‘000, % population); Rural Population (‘000, % population).
BMI’s Retail Risk Reward Index
BMI’s Risk Reward Indices provide investors looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Provides a detailed country-specific analysis of the key trends and developments in the retail sector as a whole, as well as an assessment of the main drivers affecting the major retail segments including mass grocery retail, fashion, pharmacies, consumer electronics, home improvement and personal care. The market overview also considers the most effective store formats in a given country and the impact of these factors on the main international and domestic players’ development strategies.
This provides a brief overview of the key players in each subsection of the retail sector including MGR, Fashion, Home Improvement, Consumer Electronics, Pharmacies, and Department Store chains.
The Retail Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.