Saudi Arabia’s Market COVID-19 Situation Report – Week 2 March 2020

Regional COVID-19 Update

UAE registered the first cases in the GCC with four cases on the 29th of January followed by Kuwait three cases on the 24th of February. The cases started spreading in Kuwait, Saudi Arabia, Oman, and Bahrain in the last week of February and early March as a result of travelers returning from Iran.    

GCC Countries Daily Infections – WHO (January to 15th of March)

Saudi Arabia COVID-19 Update

Saudi Arabia registered the first case on the 2nd of March. A Saudi national from the Qatif (a city in the Eastern Region) was returning from Iran through Bahrain. Qatif registered rapid community spread that led the Saudi government to take swift measures such as suspending schools on the 7th of March and then isolating the city on the 9th. The Saudi government took additional precautionary measures prior to the first case starting from late February. The government suspended the use of the national ID for entry on the 28th of February and then suspended issuing new Umrah and other types of visas to countries with high infection rates on the 29th of February. The Kingdom registered a total of 118 cases by the 15th of March that are mainly located in the Eastern Region and Mecca region.

Confirmed cases by region – Saudi Ministry of Health (January to 15th of March)
Confirmed Cases by Region – Saudi Ministry of Health

Market Performance Update

The severity of COVID-19 market impact varied from one region to the other regions based on the count of cases, unique market characteristics, and government spread preventive measures. The fashion, foodservice, and entertainment industries started feeling the impact of COVID-19 during the first week of March.

Daily Infections Impact Tracker – Saudi Ministry of Health + Global Markets

Riyadh

The impact of COVID-19 on Riyadh started late compared to the other regions where the Entertainment industry was shocked by the nationwide government ban on cinemas on the 11th of March which was then followed by the ban on family entertainment centers on the 14th of March which led to the 100% decline of performance in both cinemas and family entertainment centers on the 14th of March onwards. The foodservice and fashion slowly declined the growth performance since the first announcement of the first case to reach -48% for foodservice dine-in (takeout only), -94% for fashion, and -30% for foodservice delivery. According to the Royal Commission for Riyadh, the population in Riyadh reached 8.2 million people (Saudi Central Department for Statistics & Information 2017) which is the second highest in the country. The high population with strong disposable income in the city prevented the foodservice industry to collapse like the other cities in the country.  Restrictions on fashion and the lack of a fashion retail presence in retail strips were the reason for the drastic drop in the industry from the 14th of March onwards.

Photo by: FAYEZ NURELDINE

Eastern Region

Being the first region to register an infection in the country followed by a community spread and a city lockdown within a week from infection caused the foodservice, fashion, and entertainment industries to plunge to -36% drop in performance revenue for foodservice delivery, -52% for foodservice dine-in, -40% for entertainment, and -41% for fashion. The nationwide government measures which started on the 11th caused the four markets to drop to the second lowest levels in the country. The continued lockdown in Qatif and the general negative consumer sentiment are keeping the revenue performances in the Eastern Region lower than other regions in the kingdom.

Makkah Almukaramah (Mecca)

Despite the fact that Mecca did not register any cases until the 9th of March, the city however witnessed regional tourism and business restrictions that weakened consumer confidence which resulted in the first signs of market drop in the country. GCC nationals were barred from entering the holy city on the 29th of February, Umrah was suspended on the 4th of March, the holy mosque was closed one hour after Isha prayers, and other city level business and trade restrictions were imposed in the first week of March. Cities in the Western Region such as Mecca and Jeddah operate more outdoor retail strips than other cities in the kingdom which impacted the fashion industry but not as much as the other regions where malls were shutdown.

Jeddah

The early impact witnessed in Mecca was also evident in Jeddah due to its proximity and utilization as a travel hub to the holy city. The foodservice dine-in witnessed a steep drop on the 8th of March as a result of Sheesha ban. Jeddah dine-in scene is strongly tied with sheesha due to its cosmopolitan culture. As for the fashion market, it registered a dip reaching -83% which is considered better than other cities such Riyadh and the Eastern region due to the presence of outdoor fashion retail. Fashion retailers were allowed to operate few more days after the March 15th decision to close retail malls. Fashion retail operations was reduced even further to prevent viral community spread.

WHAT IS NEXT?

Since the 15ht of March, the Saudi government have taken additional measures to subside the viral spread in the country which in turn further impacted the business ecosystem. A partial curfew was imposed on the 23rd of March every day from 7 pm to 6 am. Businesses that were still permitted to operate sustained additional drops to their operation and had to adjust to the new changes. For example, pizza outlets that used to operate from 12 pm every day, started serving pizza at 7 am. The foodservice delivery is expected to register additional loses during the next three weeks.
The GCC countries including Saudi Arabia are taking extreme preventive measures to maintain a low infection rate and to slowdown the spread of the virus to avoid a healthcare system collapse. Such measures which for now seem to be imposed until the 13th of April.

New specialized delivery solutions targeting emerging habits such as fashion and FMCG delivery solutions that had weak consumer adoption are expected witness rapid growth by new and pre-existing.


The COVID-19 impact is mainly affecting businesses where rent, cost of goods sold, loan payments, and salaries are due despite business operation. The Saudi government like other governments around the world is introducing economic measures to prevent an economic collapse and to sustain businesses through and post COVID-19 crisis. On the 20th of March, the Saudi government introduced its first economic stimulus package to include more than 70 billion Saudi Riyal of government fee exemptions and 50 billion Saudi Riyals to support SMEs, the banking sector, and financial institutions. The COVID-19 financial impact on the Saudi consumer is minimal since a large segment of the population is employed by the government (13.1 million Saudis as of 2016 according to are General Authority for Statistics) and they will continue to receive their salaries without interruptions. The Saudi government worker is expected to have limited spending during the crisis and direct the un-used disposable income to fuel a market rebound in the foodservice, fashion, and entertainment once the crisis is over.
The government is expected to maintain its grip on certain activities even after the 21 days curfew to maintain a low infection rate while easing limited measures afterwards. Easing out measures gradually will be reflected on certain regions over other regions due to their unique business characteristics. Jeddah and Mecca with their large fashion presence in outdoor retail strips will rebound the fastest if restrictions are lifted from the outdoor shopping outlets but not retail malls. The foodservice however will continue its affected performance rate in Jeddah and Mecca but will quickly recover in other regions due to the sheesha ban which is expected to continue even after the 21 days. The Eastern Region with the continual lockdown on Qatif has suffered the most and is expected to recover last due to the community spread and high confirmed cases registered.

Easing out measures gradually will be reflected on certain regions over other regions due to their unique business characteristics.


The market as a whole will witness similar regional consumer long term affects that are changing the face of the fashion, foodservice, and entertainment industries. The market is expected to produce new specialized delivery solutions targeting emerging habits such as fashion and FMCG delivery solutions that were present but had weak consumer base. Pre-existing delivery solutions are expanding their delivery services to include more delivery verticals that were not available before and expand the growing market demand. The government’s exclusion and allowance of the services to operate during curfew hours is a major advantage and the benefits expected from such nationwide adoption of the services is expected to establish the reliance of such services in the long term.

Report Resources

About Global Markets

The Company

Global Markets is a specialized consultancy firm in market research and business intelligence services covering the GCC markets since 2010. Global Markets’ research methodology depends on covering 100% of businesses that have a physical market presence. The detailed and micro study of businesses and brands is the key differentiator factor for Global Markets’ business model. The company’s strength in linking information from business owners to their operating branches is valuable to reach and better understand market conditions.

For more information, please contact

info@globalmarkets.com.kw http://globalmarkets.com.kw/

Methodology

Global Markets’ research methodology depends on covering 100% of businesses that have physical market presence. The detailed and micro study of business and brands is the key differentiator factor for Global Markets’ business model. The company’s strength in linking information from business owners to their operating branches is valuable to reach and better understand market conditions.

Definitions

Performance Change

The estimated daily revenue change year on year. The revenue estimates are derived from Global Markets’ historic and current primary research estimates and artificial intelligence algorithms developed by the company.

Confirmed COVID-19 Cases

The count of confirmed cases as per the World Health Organization definition.

Daily COVID-19 Cases

Regional and international counts were based on the WHO situation reports. Domestic case count was based on the local Ministry of Health count and press releases.

The Author

Ali Boshehry

Managing Director

Global Markets

E: ali@globalmarkets.com.kw

Linkedin Profile

Ali holds an Engineering degree from Vanderbilt University and has over 10 years of consulting and business intelligence experience dealing with international and regional enterprises. Currently, Ali leads the data and market intelligence coverage of the GCC market by conducting intensive primary market size and share research in the real estate., hospitality, foodservice, fashion, healthcare, and retail industries.

Kuwait Market COVID-19 Situation Report – Week 2 March 2020

Global COVID-19 Update

The infection rate has been skyrocketing globally while the rate in China has been subsiding. The number of cases in China has been growing at an average of 0.14% in the first 15 days of March compared to 17.5% growth rate for the rest of the world. While China continues to loosen its measures by closing all the temporary hospitals, the rest of the world is witnessing social and market disruptions. The political system in China enabled the country to contain the spread and manage it efficiently more than what is being witnessed now in Europe and North America. Global crisis management and governments’ ability to manage and control the spread of the virus impacts the single consumer seeking to buy a meal for lunch. The positive news in China were not able to develop a positive market sentiment due to two factors. By the time China was able to control the pandemic by the end of February, the rest of the world started registering a sharp rise in their infection rate. The global economy was witnessing shortages in January that affected the supply chain due to the inactive factories in China which also affected the oil market. Once the Chinese pandemic started easing, the spread of the virus started to take over the world. The factories that were shut in China were operating again but consumers around the globe could not spend due to their government’s lockdown and fear of infection.

The Chinese and South Korean models have proven to be effective in their home countries due to their unique cultural and political systems. Other countries however (mainly in Europe) have been late to recognize the severity of the virus spread and along with the public panic which by itself affected consumer confidence and shook financial markets to lows never witnessed in this generation. The ability of Europe and North America to overcome the virus related financial impact in a similar timeframe in China is crucial to reduce the global short and long term impact of COVID-19.

The ability of Europe and North America to overcome the virus related financial impact in a similar timeframe in China is crucial to reduce the global short and long term impact of COVID-19.

Regional COVID-19 Update

The GCC countries have been taking drastic measures to counter the spread of the virus ahead of other countries in Europe and the North America. Kuwait namely is at the forefront of the disease counter efforts since the announcement of the outbreak in Iran in the last week of February. The country has since taken drastic yet important actions to quarantine the virus and slowly cure those infected (mainly travel related cases).

COVID-19 Expat Testing in Kuwait by Ministry of Health – Photo by Yasser Al Zayyat

Market Performance Update

The market showed little recovery in the first few days in March where consumers built up confidence in the drastic yet important government measures. Such confidence reduced the severe drop in the foodservice, fashion, and entertainment industry. That short-lived growth was shattered with new governmental measures and public announcements of the importance of social distancing. The performance was severely witnessed in the Family Entertainment and Cinema industry with a 90% decline by the fourth of March which declined further to 100% due to the new laws imposed by the government on the 9th of March. The fashion industry and foodservice dine in were also hit hard reaching -70% decline in performances compared to the same period last year. The foodservice delivery was the only category that maintained the lowest market decline with 30% decline in performance compared to the same period last year. The foodservice dine-in started crashing even further once the government started imposing new restrictions such as the sheesha ban on the 4th of March and then prohibiting dine in and shutting malls on the 14th of March. The foodservice dine in is at its lowest in Kuwait’s history with dine-in only counting for takeaway orders from restaurants that are not located in retail malls.

The foodservice delivery was the only category that maintained the lowest market decline with 30% decline in performance compared to the same period last year.

The fashion industry was also hit drastically with the same measures and it is also at its lowest nearing a 100% decline in history since the retail malls shut down. There are still some fashion outlets operating in cooperatives and retail strips but are avoided due to consumer’s shifting their interests to more immediate and necessary goods.

At this rate, the fashion, entertainment, and foodservice industries are changing in ways that were never possible before locally. Despite the different rental discounts that have been announced by the major malls in Kuwait, players of different sizes are expected to exit the market sooner than during normal market conditions. Companies and brands that relied on lower margins that made minimum financial viability will be forced out due to many financial pressures occurring all at ones such as higher human resources costs and compensations, loses in cost of goods sold, and expensive real estate cost. Locals in Kuwait have been immune to global economic fluctuations due to the strong government backing of their income which is expected to continue during this crisis. Such income continuity will hit the private sector unless the government steps in and rescues/stimulate the sector. The continual government salaries during the crisis means that consumers are only spending on necessary fast-moving consumer goods and some foodservice deliveries. Disposable income is pilling up with spending which is expected to generate a rebound in the fashion, entertainment, and foodservice markets once restrictions are lifted/eased.

Companies and brands that relied on lower margins that made minimum financial viability will be forced out due to many financial pressures occurring all at ones

WHAT IS NEXT?

The changes happening in the fashion, entertainment, and foodservice industries are forcing new consumer habits that are expected to be permanent. The foodservice industry revenue generated from dine in is expected to decline even after the COVID-19 crisis in favor of more foodservice deliveries and fast-moving consumer goods. Online fashion retail revenues are expected to increase, and consumers are expected to adopt to online shopping more than the pre-COVID-19 era. Family Entertainment Centers (FEC) and movie theaters are expected to suffer the most due to the social interaction nature with strangers in such venues. FECs and Cinemas need to implement expensive hygienic measures and new consumer experiences to attract consumers. The delivery of goods business that was able to sustain fierce competition and consolidation in 2020 is expected to witness growth pressure in the short to long term in terms of expanding the product delivery variety and geographical coverage. Online businesses that relied on conducting physical shopping tasks such as Tons, Drops, and Tawseel which registered slow growth due to weak consumer adoption are expected to significantly grow and maintain their growth as a result of this consumer habit change.

Report Resources

About Global Markets

The Company

Global Markets is a specialized consultancy firm in market research and business intelligence services covering the GCC markets since 2010. Global Markets’ research methodology depends on covering 100% of businesses that have a physical market presence. The detailed and micro study of businesses and brands is the key differentiator factor for Global Markets’ business model. The company’s strength in linking information from business owners to their operating branches is valuable to reach and better understand market conditions.

For more information, please contact

info@globalmarkets.com.kw http://globalmarkets.com.kw/

Methodology

Global Markets’ research methodology depends on covering 100% of businesses that have physical market presence. The detailed and micro study of business and brands is the key differentiator factor for Global Markets’ business model. The company’s strength in linking information from business owners to their operating branches is valuable to reach and better understand market conditions.

The Author

Ali Boshehry

Managing Director

Global Markets

E: ali@globalmarkets.com.kw

E: ali@globalmarkets.com.kw

Ali has over 10 years of consulting and business intelligence experience dealing with international and regional enterprises. Currently, Ali leads the data and market intelligence coverage of the GCC market by conducting intensive primary market size and share research. Ali has been leading the primary research team in Global Markets since the company’s inception in 2010. Ali’s has research experience in the real estate, hospitality, foodservice, fashion, healthcare, and retail industries.

Market COVID-19 Situation Report

KUWAIT – FEBRUARY 2020

The foodservice, fashion, and entertainment market performances in countries with higher rates of COVID-19 infection rates have been severe due to shaken consumer confidence and government forced quarantine and warning measures to reduce/avoid community spread of the virus. The first report cases in the GCC were in UAE with 4 infections in January of 2020 which was contained at the airport.

The infections however continued to grow yet captured at ports of entry but remained at low rates in the GCC in January and most of February. Iran registered its first cases on the 20th of February which kept rising expectantly. Such fast-viral spread led many of the GCC nationals who were spending holiday time in the country to return and cause the first cases (aside from those registered in UAE).

Kuwait which had around 800 tourists in Iran at the time started evacuating its citizens from the country on the 24th of February. Kuwait registered its first cases on the 24th and the numbers continued to increase as more evacuation flights arrived in the country. Kuwait registered the highest infections of COVID-19 in the GCC by the end of February with 45 cases. Kuwaitis were also vacationing in other parts of the world where the virus started spreading such as Italy and Thailand which caused their relatives in the country to be more exposed to the international and local coverage of the virus.

Photo by Yasser Al Zayat
Photo by Yasser Al Zayat

Such exposure caused the fashion, foodservice, and entertainment sectors to tank drastically compared to previous years. The average revenue per store across the different highlighted markets registered a slight decline in performance due to the national holidays at the end of February every year. Performances however used to recover quickly as soon as travelers come back in March. 2020 registered the worst revenue performances in the last week of February with negative growth between 60% to 95% across the highlighted industries.

Fashion and entertainment registered the highest negative rates of -85% and -87% respectively. Foodservice dine in and delivery witnessed a less severe decline with -66% and -37% respectively. The performances across the different industries started to slowly recover on the 28th of February onwards due to the fast government response to the disease. Foodservice delivery and dine in is recovering faster than other sectors and are expected to slowly recover in March as long as low new infections are recorded especially among the expat population. Fashion and entertainment (family entertainment and cinemas) are expected to take longer to recover due to consumers allocating their disposable income toward necessary crisis spending than leisure spending on entertainment and fashion.

Photo by Yasser Al Zayat

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About Global Markets

Global Markets is a specialized consultancy firm in market research and business intelligence services covering the GCC markets since 2010. Global Markets’ research methodology depends on covering 100% of businesses that have a physical market presence. The detailed and micro study of businesses and brands is the key differentiator factor for Global Markets’ business model. The company’s strength in linking information from business owners to their operating branches is valuable to reach and better understand market conditions.

For more information, please contact

info@globalmarkets.com.kw | http://globalmarkets.com.kw/