Bordering the Persian Gulf between Iraq and Saudi Arabia, Kuwait may be a small nation compared to its neighbours, but its high incomes, rising levels of inbound tourism and expanding mall scene could offer new opportunities for international beauty brands.
Kuwait is home to a population of some four million people, around a third of whom are Kuwaiti nationals. The eighth richest country in the world, some 90% of Kuwait’s export earnings are derived from oil. Locals pay no income tax (although the government is expected to introduce VAT in 2018) and average incomes are high. Political and bureaucratic obstacles have served to make the business environment somewhat clunky; however the Economist Intelligence Unit predicts this will improve as changes to taxes, infrastructure and policies relating to private enterprise and competition are made, and as investment in Kuwait rises between this year and 2020.
High Incomes, High Spend
High average incomes coupled with government subsidies give Kuwaitis the means to purchase luxury products, say experts, which is a boon for Kuwait’s beauty market. A study released in March 2016 by Kuwait’s Al-Qabas daily newspaper, found 205,000 to 230,000 Kuwaiti women spend KD350-400 ($1,146 – $1,310) per month on beauty, cosmetics and fitness, bringing their total spending to KD980 million ($3.21bn) per year. The study found that between 50% and 60% of Kuwaiti women aged between 15 and 55 spend considerable amounts of money on beauty, and, given their affluence, seek out the latest products in cosmetics products and services, including skincare, fragrances, nails, spa treatments and plastic surgery.
However, distribution options for premium beauty brands remain somewhat limited, which could be holding back the development of Kuwait’s beauty market. Occupancy rates in prime malls is around 90%, with demand for retail space increasing, according to an August 2015 report by Maremore Mena Intelligence. The report notes that Kuwait’s 712,000 m2 of retail space is set to increase by 174,680m2 by 2017. The report also notes that while the cosmetics and fragrance categories have a presence in luxury retail, “high-end fashion and accessories enjoy a bigger share of the overall market”.
With some 800 stores, the 250,000m2 The Avenues Mall is Kuwait’s largest mall and far outstrips its rivals, 360 Kuwait and The Gate Mall in terms of size and offer. However, although Middle Eastern fragrance brands have a reasonable presence in the mall, The Avenues’ premium offering is anchored heavily in fashion and jewellery and by the presence of UK department store Harvey Nichols. Few beauty brands apart from MAC, Jo Malone, The Body Shop and Lush have opened stores in The Avenues. A $2bn extension of The Avenues is due to be completed in 2018 will provide space for 400 new retail outlets.
As is the case in neighbouring countries, Kuwait has a high online penetration and around 75% of the population has access to the internet. The total e-commerce market in Kuwait is expected to double from an estimated $0.56bn in 2014 to $1.07bn by 2020, according to Maremore Mena Intelligence.
