Kuwait Retail: Kuwait Building Materials

Interview with Khaled Hassan Abul. Abyat Megastore business looks very closely at Kuwait renovation and building materials market due to customer spending in Kuwait. Through salary increases and bonuses in government jobs in Kuwait that would mean more spending for building materials.  Abyat Megastore also looks at Kuwait new sites where new housing developments are going to be built. There is a gap there still but this is really a major market for us in building materials.  If there are new homes there is a need for new building materials, finishing materials, and furniture- this is where Abyat Megastore comes into play.


Kuwait is a leading player in the region’s retail sector and whole sale and retail trade grew by a compound annual growth rate of around 5.8% between 2002-2007.  What is your assessment of the retail sector for 2009 and what is the retail outlook for 2010?

Kuwait, like many oil producing countries in the GCC, has an economy driven by the production of oil.  The demand of oil and the price of oil are the main measures that we use to judge the future performance of retail.  The cycle is very simple, high income for government, higher pay for government employees (usually locals) and then this leads to growth in spending.  The current economic situation in the area is driven by the production of oil and the impact of the crude prices of oil and the demand directly effect the pay the government employees receive and their bonuses.  Looking forward we are also concerned with population growth because in this area we have one of the highest population growth rates.  The gap in residential housing availability compared to the age ground between 28-48 years old is also of interest to us.  Based on these three areas we closely observe we see growth in oil prices, population, and a deficit in housing for locals in the GCC.  The government is aware of the housing deficit and has many big projects to help develop infrastructure and close the housing gap.

What does this mean for the retail sector?

Our business looks very closely at the renovation market due to customer spending.  Through salary increases and bonuses in government jobs that would mean more spending.  We also look at new sites where new housing developments are going to be built. There is a gap there still but this is really a major market for us.  If there are new homes there is a need for new building materials, finishing materials, and furniture- this is where we come into play. 

Mastercard’s fifth worldwide index of consumer confidence found consumer confidence to be neutral in Kuwait for the second half of 2009.  How are you going to mitigate the retail crisis of lessened consumer confidence as an individual company?

In industrial companies like western countries the economic cycle is typically based off production and the availability of jobs, job security, and higher consumer spending.  In our area is really just depends on oil production.  Foreign  employees here do not feel as confident here with their consumer spending but I feel that the locals confidence is likely more unchanged.  85% or more of our business is serving local citizens so we haven’t really been affected.  The retail sector has been the least affected by the economic crisis.

Abyat is a GCC closed shared holding company that was started in 2005 and its core line of business is the provision of retails/building materials but Abyat considers itself a service company.  How would you describe your unique concept, your strategy, and a brief history of how this idea came about?

Our vision stemmed from a group of friends and shareholders at the same time.  The idea was to create an economical entity where we could exhibit out capabilities towards the worldwide creativity we see in businesses every year.  Everything good we can see in life comes from thinking creatively in business.  We wanted to contribute and we didn’t want to standby, importing ideas and creative ideas so we created everything by ourselves in order to be competitive and reinvent the wheel.  Our vision is to inspire other families and business owners to think more mission oriented in order to focus on people and their education and training.  We should no longer just settle. 

Can you explain your expansion strategy?

We have ten stores.  We would like to export our concept to the twelve major cities in the GCC region before 2013.  This is a major challenge because preparing the leadership to take charge of our operations is difficult.

How are you going to establish your brand in such a short time?

We need to chose the right location.  Our store is huge and finding a location for it is a challenge.  We also work through regional media and PR networks in order to establish our brand. 

What is the additional value you are able to offer over your competitors?  You compete with Ikea and other established brands from Europe who may come into the region so how can you stay ahead?

Products are available everywhere.  In Ikea they don’t sell furniture, they sell the Ikea philosophy.  The major thing the customers look for is the philosophy of people behind that concept.  We have great respect for the people being Ikea and they have inspired us but we have a completely different philosophy and follow the style of the GCC not the Swedes.

In the future are your planning to franchise your concept to Europe and export the Kuwaiti concepts to them?

This is our dream.  I don’t know if we will see this in my time or in the time of the leaders after me but this is one of the major things we think about.

How would you define the typical Kuwaiti or GCC customer?

GCC countries have the upper 1/3 economic status and this is linked to expenditure.  I have seen many changes in habits for GCC and Kuwaiti customers when it comes to building their houses and they seem more open as a result of more exposure to different parts of the world.  They are astute customers who have a vision of their project, their budgets, and their style. Additionally, they lean towards elegance and simplicity in their designs. 

What is your major challenge?

Leadership.  We have proven that in retails and development concepts and merchandising that we are in the upper echelon of our business operations.  We have received many compliments from our customers related to the way we conduct our business.  My worry is how can we transfer our motivations and dreams into the minds of our people so they can go out and exude the same positivity and attitude towards building Abyat.

What are you doing in order to address these challenges?

This year we will be the company with the highest hours of training per employee in the Gulf.  We are going to give more than 180 hours a year per employee.  On all sides our employees will need to be aware and up to date on their training and aware of the best methods and operations in the world.  Team work will also be essential and we are investing in this area in particular.  We have some of the best people at Abyat and great minds that we can develop into leaders.  The challenge, however, is the prepare leaders in such a short amount of time.

What is your past experience and how did this idea come into reality?

By good fortune I was taught and education by my father who was one of the most well known merchants in the field of building materials and finishing materials in all of the GCC countries.  The company I used to work for and where I was trained catered to upper markets and worked with the best brands in the world called Hassan Abul Company.  We saw that there were a lot of customers in the middle market who were not being catered to and it was there we saw our opportunity.

In terms of corporate social responsibility how active are you and what kind of programs do you have?

When we were building Abyat we wanted to build an economical entity who could fulfill all of its obligations.  The private sector is the initiator who can build prosperity in order to benefit the country, not the government, in my opinion.  We do a lot of activities for our customers to inform them of how to build a better house in association with the Kuwait Engineering Society and we also support a lot of activities to build the nation up.  We support Kuwait’s Engineering College and University, sponsor professors activities, and we support building green buildings and environmentally friendly operations.  Our major focus today is to make our customers more aware and to directly invest and support the engineering society in our nation.

In terms of your suppliers do you have a preference for environmentally friendly products?

Yes and we have been practicing this for years.  We ask our suppliers a lot of questions and we only partner up with customers who share the same concerns as us about the environment.

What are your needs in terms of suppliers and people?

Abyat is a modern and dynamic customer who has talent from all over.  We work as a team and we share a big dream.  It would be my pleasure to have more hands with us helping and helping us achieve this dream.

How would you describe the uniqueness of your concept from the western concept?

In the west the market is a market of the homeowner working on the weekend to fix some things.  Many products are designed for speed and for a customer who knows what they want.  We are different because we can cater to many needs for big projects with package solutions.  Everything in this store is some how connected to this world but nothing is a direct copy.  We also differ in our packaging of our materials.  There is a lot of freedom and our customer can spend hours here playing around to figure out what they need to do their project. 

Do you consider growing by franchise or by yourself who is expanding?

Seeing all the difficulties we faced here to control our operation I would feel more secure opening our next 10-12 stores by ourselves directly.  Once we reach a good level of systems. procedures, and leaderships to train our investors then we might consider franchising as well.

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