The Middle East | 30 Jan 2013
The opening of the long awaited, third phase of The Avenues mall in Kuwait has provided the retail sector with a major boost, while reaffirming a growing demand for luxury goods.
Kuwait has one of the highest per capita GDPs in the world, estimated at $45,757 by the IMF in 2011 and forecast to increase to $52,267 by 2014, giving its consumers considerable spending power.
The number of high-profile, international retailers moving into new shopping centres is also on the rise, signalling a growing confidence in the Kuwaiti market. However, as competition in the sector heats up, industry players are recognising the need to attract both new and repeat business, citing customer loyalty as a key component of long-term success.
Rising consumer demand has led to a wave of new shopping centres opening their doors in Kuwait in recent years. 360 Kuwait, which began operating in 2009, is home to 82,000 sq metres of retail space, and the Mall of Kuwait is expected to have a 150,000 sq-metre capacity when it opens.
In its expansion, which covers an area of more than 100,000 sq metres at a cost of KD150m ($533m), The Avenues has adopted the increasingly popular model of combining retail outlets with family entertainment options. The new sections of the mall include the Grand Avenue, which has become a talking point due to its unusual architectural design. The avenue sets out to conjure up an outdoor, “European” shopping experience, with retailers located on a 500-metre-long, 20-metre-wide, tree-lined boulevard.
The mall’s new sections contain a number of small boutiques and international retailers, as well as popular restaurant chains. New retailers include the first overseas branch of the American kitchen supply and gourmet goods store Williams-Sonoma. The store opened in November in partnership with M.H. Alshaya, a Kuwait City-based global franchise operator.
Further sections of the development are set to open in the coming months, including Prestige, which will house a number of high-end retailers, including a branch of Harvey Nichols. The third phase will also witness the construction of the Mall, which is to serve as a connection between the buildings constructed in the shopping centre’s first two phases. The Mall is set to contain a jewellery souk, and a 5000-sq-metre section of the first floor has been dedicated to children’s entertainment. Another area of the mall, SoKu (“South of Kuwait”) is modelled on New York’s famous SoHo district and is intended to attract a younger segment of the Kuwaiti population.
While the expansion of the retail sector is gaining pace, luxury goods sales have suffered in recent years due to a wave of consumer wariness sparked by the global economic crisis.
Shahzad Gidwani, the general manager of the trading division at Kuwait-based luxury goods trader Mourad Yousuf Behbahani Company, told OBG that overall luxury sales were flat in 2012 and that future expansion may necessitate a change in the way retailers interact with their clients. Gidwani told OBG that by encouraging younger customers to see the value in owning luxury goods, retailers would promote brand loyalty and, in turn, generate growth.
In a separate interview with OBG, Aref Easa Al Yousifi, the vice-chairman and managing director at Easa Husain Al Yousifi & Sons, a Kuwait City-based electronics distributor, also emphasised the importance of cultivating better customer service standards. “The Kuwaiti consumer, especially in the technology market, is becoming more sophisticated,” he told OBG. “Quality and after-sales services are becoming increasingly important, therefore it is becoming harder to compete.”
Kuwait’s malls are expected to retain their popularity with consumers, especially centres offering a multi-faceted shopping experience that includes family-friendly facilities and entertainment. Rising demand should bring more luxury lines to local malls, although they will need to focus on their competitiveness, rather than relying purely on brand name, to flourish in an increasingly diverse market.