Retail

Kuwait: Buying in

Retailing is big business in Kuwait, and retailers can look forward to strong growth prospects due to economic and demographic trends over the medium to long term. This year, with the economic rebound already under way supported by the country's pro-growth policy, consumer demand is set to rise, though authorities will be wary of the threat of inflation. Kuwait's retail sector has blossomed over the past decade, with international brands proliferating and consumers flocking to newly opened malls. Kuwaiti enterprises have benefitted from the wave of overseas companies looking to enter the market. A variety of franchising structures exist to facilitate access for chains but most are either revenue-sharing agreements or straightforward management contracts, in which a locally based company buys products from the brand owner, selling them on for a profit.

While relatively small in population, Kuwait is an attractive destination for retailers. It is a very affluent country, with GDP per head of $57,400, according to the international press. Real incomes are likely to have been trimmed slightly in the past two years - firstly by rising inflation in 2008, then by the recession of 2009 - but the long-term growth trend is positive. As Kuwait diversifies its economy, it will become less dependent on volatile oil revenues; income growth is likely to be steadier. Demographic trends are also encouraging. Around half the country's population is under the age of 30, which is likely to both stimulate continued population growth in the medium term, and bring a stream of new consumers over the coming years. This new consumer base, enjoying the fruits of Kuwait's position in a globalised economy and an outward-looking education system, will be sophisticated. Meanwhile, a new wave of expatriate workers are likely to come to Kuwait this year as the regional economy picks up, according to Gulf Talent, a recruitment and human resources research outfit. (Source: OBG)