Several businesses in Kuwait have begun feeling the pinch as a result of the measures taken by the government to contain the spread of coronavirus. Kuwait once a thriving market for retail and travel has seen the industry suddenly collapse with the closure of the airport, malls and entertainment places giving small and medium business a very big hit.
While the government has been proactive in supporting local businesses by announcing an economic stimulus package to prop up ailing businesses, businessmen are feeling the heat with huge monthly liabilities and absolutely no business.
Businesses are scrambling to cut costs and reduce the huge liability as every business is taking a hit and facing a situation they had not anticipated in any scenario. Huge monthly liabilities include rent and salaries while stocks lie unsold, businessmen have become wary of the market improving anywhere in the near future. While some have been able to get their rents waived many are not yet so lucky as it looks that the coronavirus crises will prolong.
To survive this period all budgets are being cut across the board with companies now left with no option but to retrench staff in this times of crises. To add to the present gloomy scenario of business, Kuwait’s leading retail giant Al Shaya announced a slew of measures as part of cost-cutting.
With less than 5 percent of their stores open due to restrictions imposed to combat the coronavirus epidemic, Al Shaya has seen a dramatic 95 percent drop in revenue in two months, according to acting CEO and chief operating officer John Hadden.
In a video message, Hadden addressed the company’s employees, stating that their revenues had shrunk by 95 percent while their cost base had remained the same, adding that this was not sustainable for any business, anywhere in the world.
In response to the losses caused by the coronavirus pandemic, Hadden said that Al Shaya has prepared a detailed action plan to reduce costs, which included eliminating unnecessary expenditures, renegotiating all contracts, stopping recruitment and working with brands to reduce orders in the short-term. Every cost line was under the microscope, he said.
The action plan, Hadden added, would also involve reducing “people costs” to allow the company to bounce back after the pandemic and resultant restrictions are over. Expressing optimism he said that “at some stage we truly believe things will get better, but none of us know when that will be.”
“Our goal is to protect jobs and benefits in the long-term. But to do this, we have to take some tough measures in the short-term as we manage our way through this crisis,” he said, adding that some initial actions will be communicated to employees in the coming days.
“This will affect many of us in different ways and we have sought to be fair and balanced in our approach,” Hadden added. “Please understand, taking no action is not an option. I wish it was otherwise.”
In January, Al Shaya served customers at over 4,500 stores, cafes and restaurants in 20 markets. Hadden said that when conditions eventually improve, he is confident Alshaya can rebuild its business as customers return to stores. The video message ended with Hadden thanking Alshaya’s 60,000 employees – 45,000 of whom work in the Middle East – for their support over the last several weeks.