BMI View: As a less diversified economy than some of its GCC peers, Kuwait will face greater challenges in achieving substantial growth in the environment of low commodity prices. Even though the economic trough seems to be a thing of the past, the growth in household spending will stay relatively slow in the market, which has traditionally benefited from its affluent residents. Nonetheless, a couple of large-scale mall openings in 2017-2018 could reshape the whole sector by expanding and diversifying its supply.
Key Views and Developments
Kuwait's government agreed to deregulate retail fuel market in August, which will lead to fuel price hikes of as much as 80%. While the new prices will remain much lower than in Europe, they will add an extra pressure for disposable incomes in the country.
The country's fast food market retains its appeal for foreign investment. Atlanta-based Arby ' s unveiled a plan to open as many as 25 stores in Kuwait and Saudi Arabia in the next seven years, while Dubai-based businessman Mohammed Alabbar acquired a majority stake in Kuwait's Americana Group, a franchisee for KFC, Pizza Hut, Costa Coffee and Baskin Robbins.
High-end retailers stay optimistic about Kuwait's fashion and accessories market: De Beers, Karl Lagerfeld, MCM, Lacoste and All Saints have all opened stores in the country in the first three quarters of 2016.
We forecast that Kuwait's retail market will maintain conservative dollar value growth averaging 4.0% during 2016-2020. Income growth will be rather anaemic, but expanding population will offset the deficiencies in spending.
Housing & utilities will drive the changes in household spending patterns: the sub-sector, which is bound to grow by 5.9 percentage points before 2020, will constrain the expansion of other retail categories, namely non-essential goods and services.
|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.