Kuwait plans for phased reopening

Kuwait has announced a phased approach towards recovery and reopening of businesses. The country has shared a five-phase approach towards reopening, with each phase lasting for three weeks and success determining the start of the next phase.

Under retail, during the first phase, F&B brands can operate offering home deliveries. The shopping malls will resume operation during the second phase with reduced hours and under strict guidelines. The third phase will see hotels reopening, while the fourth will allow restaurants to offer dine-in facility and the fifth will make way for reopening of entertainment centres, gyms and so on.

Evaluating consumer confidence

As economies and businesses are gradually trying to get back on feet, one of the main challenges is to evaluate consumer confidence.

“Since shopping malls are temporarily closed, it is difficult to gauge consumer confidence at this point,” states Avijit Yadav, CEO, Tamdeen Mall Management – representing shopping malls such as 360 Mall and Al Kout.

Research firm Kearney Middle East also indicates that, as such, there is no hard evidence to support any significant changes in consumer confidence currently.

“However, informal discussions with tenants and customers make us confident that the rebound in Kuwait will be very good as long as shopping malls and tenants make shoppers feel safe, which our tenants and we are working hard at and will ensure. Kuwait is not dependent much on tourism and external customers, which will further boost recovery,” Yadav adds.

“Having said that, overall, the fear of the virus has negatively impacted consumer confidence. From the markets that are gradually reopening in the GCC, footfall and sales are still in the range of 25-30%, as per tenants that operate across countries. However, there are cases of footfall increasing to over 50% and some categories are doing better than others,” he continues.

Reduced operating hours at capacity restrictions, along with the fear of the virus, redundancies and reduced salaries are all impacting the state of retail. For instance, recently, a major Kuwait-based retail group reportedly announced massive layoffs – according to a Twitter post.

Facilitating functional shopping                                                                                    

While a cure will alleviate people’s anxiety, the panic mode is slowly getting over as everyone is being responsible for maintaining the highest level of hygiene. “People are adapting to a new normal, which is more functional than experiential at the moment,” Yadav points out.

“Right now, our focus is to offer the highest level of safety when our shopping malls reopen. If shoppers feel safe about the precautionary measures we are undertaking and with the conduct of our staff, they will feel more confident to come back to the shopping malls, even if it is for functional shopping. And within the set guidelines, we will have to think of ways to make functional shopping, experiential,” he says.

Even during the curfew, Carrefour at 360 Mall and Sultan Centre at Al Kout and Souq Al Kout have been open, operating at reduced capacity. The pharmacies have also been functioning. However, that only represents the essential segments. Did Tamdeen Group facilitate online shopping from brands based in its shopping malls?

“Some amount of online shopping is happening. In fact, before the complete lockdown, we made way for our retailers to pick up merchandise from the stores and do doorstep delivery to meet customer demand,” responds Yadav. “But we are not considering creating a digital e-commerce platform, which can have broader ramifications. The solution is not for shopping mall operators to start behaving like retailers. Rather than replicating what our retail partners are good at – offering an omnichannel experience – we are keen to enable that experience. After all, the pandemic will not last forever. While people have understood the convenience of shopping online, they will come back to the shopping malls once they feel reassured.”

E-commerce preparedness

In the absence of brick-and-mortar, e-commerce transactions saw an uptick in Kuwait, akin to other GCC markets, confirms Mohammed Dhedhi, principal, Kearney Middle East.

“Kuwait has a strong on-demand food delivery infrastructure in place, and many were able to build around this to offer other essential items – mostly grocery and medicines. Non-essential categories, most likely, did not see the same uptick, following the trend observed in other GCC markets – such as the UAE and Saudi Arabia,” he elaborates.

When asked about Kuwait’s preparedness to handle doorstep deliveries and state of warehousing infrastructure, Dhedhi says, “Most 3PL (third-party logistics) and delivery providers are present in Kuwait and have or are scaling the infrastructure required to do so. The key to success will be maintaining the right service levels with the surge in demand. Consumers will push for better service levels and service quality. Hence, reducing delivery time, ensuring services such as real-time tracking, delivery schedules and contactless payments will become critical to success. Our research indicates that for many of these services, customers would be willing to pay extra. Moreover, creating the right and efficient reverse logistics infrastructure in place – facilitating product returns – will differentiate 3PLs.”

Luxury consumption in a post-COVID world

A market that loves shopping and socialising, Kuwait retail is suffering under the partial lockdown. Kuwaitis are also known for their luxury consumption, which is affected due to issues like supply chain disruption. Will luxury consumption habits change in a post-pandemic world?

“We expect the luxury segment to dip in the near-term, as clarity on reopening the economies in the region is yet to be finalised. As restrictions ease, we expect the luxury consumption habits in Kuwait to resume – although, depending on what the post-COVID world looks like, it may take time to get back to historically high levels. Our research suggests that the key trait of the Kuwaiti consumer is that they value high-quality and on-trend nature of products over price – this is reflective in consumption decisions even beyond luxury goods,” Dhedhi explains.

Strengthening lasting relationships

A strong and symbiotic tenant-landlord relationship is a recipe for success, irrespective of a crisis. The COVID-19 pandemic has only sharpened focus on building responsible relationships.

In this context, the Tamdeen Mall Management proactively and clearly communicated relief measures as soon as the COVID-19 outbreak became apparent, ensuring tenants could plan given the new situation.

“Tamdeen Group happened to be the first shopping mall operator in the Middle East that pledged support to our investors during this crisis,” states Yadav. “Towards early March, when the Kuwait government asked restaurants to close temporarily, we immediately informed our F&B partners that they would not have to pay rent for the period of closure. On the announcement of the temporary closure of shopping malls, we followed the same approach with our retailers. Besides deciding not to charge rent until our malls open, we have also announced 40% reduction on base rent for all our tenants until December 2020 from the time the malls reopen.”

“In times such as these, we need to think long-term. The retailer and the shopping mall are intertwined. One cannot exist without the other. Both need to act, so both can get through these difficult times, together,” he emphasises.

Not only tenants, Tamdeen Group has undertaken adequate measures to support the ancillary industries that are dependent on the functioning of the shopping malls. Importantly, the developer remains committed to helping its people amidst the pandemic.

Looking ahead, Tamdeen Group is preparing to once again welcome visitors through the doors of its shopping malls as they reopen.

“If we build great places, people will come – we have always believed in this philosophy,” Yadav opines. “How we will rethink the space is an important question. We will look at having the most innovative, customer-oriented and multichannel retailers in our shopping malls. We will also have to leverage the latest pieces of technology. The malls will have to be even more convenient and consumer-friendly than before to create a great shopping journey. Above all, we will have to make our visitors feel safe every time they visit our shopping malls.”

 

For all the latest retail news from the Middle East, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube page.