The sector is expected to see an expansion of retail space

The growth witnessed across Kuwait’s retail sector in recent years looks set to continue as additional outlets open their doors in newly available retail spaces. High-end malls offering luxury brands, in particular, are proving popular with Kuwaitis, who rank among the GCC’s most affluent consumers. Analysts expect 2014 to be another strong year for Kuwait’s retail sector, with key international brands looking to boost their presence. New shopping centres, including The Gate Mall, are preparing to open for business, while other ventures, such as The Avenues, plan to expand.

Kuwait came eighth overall on A.T. Kearney’s 2014 Global Retail Development Index, edging up one place from 2013 and maintaining the number two spot within the MENA region behind the UAE. The survey attributed the improved ranking to steady economic growth, higher consumer spending and a stronger representation of international retailers.

New Openings

In March 2013, Marks & Spencer moved to strengthen its foothold in the country by opening a new 6700-sq-metre store in Kuwait City. The store, which brings the retailer’s total number of outlets in the region to 26, is operated by Marks & Spencer’s long-term franchise partner, Al Futtaim Group. “The Middle East is a priority market for Marks & Spencer and [...] we are continuing to build our presence here,” Mark Bolland, CEO of Marks & Spencer, told local media at the store’s opening. The outlet marks the retailer’s largest store outside the UK.

Just weeks earlier, Kuwait’s biggest hypermarket opened its doors in Dajeej. Covering 21,400 sq metres, LuLu Hypermarket will serve the suburbs of Messilah, Mishref, Salwa and Jleeb Al Shuyoukh. The hypermarket is expected to host a number of established names, including Costa Coffee, Malabar Gold, Dunkin Donuts and Damas. The company also said it planned to open four additional outlets in Kuwait before 2016 as part of its expansion strategy in the GCC market.

Focus On Luxury

Kuwait has one of the highest concentrations of international retailers in the GCC region, according to A.T. Kearney, with the luxury segment proving a major draw. Several high-end brands, including Chanel, Burberry, Louis Vuitton, Prada and Christian Dior took up residence in the Prestige section of The Avenues when the third phase of the mall’s expansion was completed just over a year ago. The extension made available an additional 100,000 sq metres of space, sufficient to house around 400 shops.

Kuwait’s high GDP per capita – estimated at KD13,413 ($47,161) in 2012 by the Central Statistical Bureau – means the country is well placed to drive growth across the luxury retail segment. A recent report by Business Monitor International suggested that the comparatively relaxed dress codes and sizeable young population could also be boosting spending on high-end fashion. “In a country in which 45% of the population is in the 20-39 years age range, important for household spending on the retail sector, malls such as The Avenues are attracting young consumers keen to buy international brands,” the report read.

Ongoing Development

The fourth phase of The Avenues’ expansion, which is in the design stage, is expected to include two five-star hotels, additional shopping space and a multi-purpose ballroom when finished. The Gate Mall is a six-floor, 37,000-sq-metre shopping centre and is currently under construction near the American University of Kuwait. The mall, which is being built by Al Kuthban Construction, is another venture set to open in the coming months, and once completed, is expected to include more than 275 shops, making it Kuwait’s second-largest shopping centre.

The developers of Al Salam Mall, a $142m project offering 26,680 sq metres of gross leasable area, announced in September 2013 that more than 70% of retail space had been leased.

Refined consumer tastes and heavy spending on quality brands are key drivers of the country’s high-end retail. Kuwait’s young, wealthy customer base and penchant for luxury labels should ensure that demand remains strong, paving the way for further expansion.