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Brazil Retail Report Q2 2010
Business Monitor International, March 2010, Pages: 61
Brazil Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Brazil's retail industry.
The Q210 Brazil Retail report forecasts that the country’s retail sales will grow from almost US$415bn in 2009 to over US$759bn by 2014. Generally positive trends in underlying economic growth, an enormous and growing population and rising disposable income are key factors behind the forecast growth in Brazil’s retail sales. Easier access to credit and the emergence of a wealthier middle class are also likely to help the value of the retail segment increase during the forecast period. Brazil’s nominal GDP was US$1,508bn in 2009, with 2009’s decline of 0.6% expected to turn into growth of 5.0% in 2010 as the economy recovers. Average annual GDP growth of 3.4% is predicted by BMI between 2009 and 2014.
With the population increasing from 195mn in 2009 to an estimated 206mn by 2014, GDP per capita is forecast to rise by 71.6% by the end of the forecast period, reaching US$13,285. Our forecast for consumer spending per capita is for an increase from US$8,026 in 2009 to US$10,009 by 2014. The national monthly minimum wage rose by 26% in real terms between 2003 and 2006, and by 2009 the average annual salary had reached US$9,965. The lifestyles of middle and upper-income groups increasingly mirror those of their counterparts in developed countries and overall purchasing power has been increasing. However, income inequality is a major concern, with consumption patterns varying significantly according to salary. More than a third of the population lives on or below the poverty line and outside the main urban areas the proportion is closer to half.
In 2005, 67.8% of the Brazilian population was described by the UN as economically active, with 40.3% in the 20-44 age range, which is vital for retail sales. More than 84% of the population was classified by the UN as urban. By 2015, the urban population is forecast to have exceeded 88%, with 39.5% in the 20- 44 age band and 66.9% of the population expected to be economically active.
The non-grocery sector is outperforming the food sector as consumers increase their spending on household items and durable goods such as furniture, domestic appliances, cars and clothes. Easier access to credit is also proving to be good news for the retail sector. There were 118mn credit cards in Brazil in 2007, up from 44mn in 2003, according to Banco Central do Brasil (BCB).
Retail sub-sectors that are expected to show strong growth over the forecast period include food and drink, with sales predicted to rise from US$156.23bn in 2009 to US$291.67bn by 2014. Over the counter (OTC) pharmaceutical sales are forecast by BMI to increase from US$4.18bn in 2009 to US$7.66bn by 2014, up by 83%. Automotives sales are forecast to increase by 83.5% during the same period to reach US$101.74bn. The consumer electronics sector is predicted to grow by 62% between 2009 and 2014, from US$18.56bn to US$30.07bn.
Retail sales for our Latin American universe in 2009 amounted to an estimated US$1,269bn, based on varying national definitions. Total consumer spending for the region, based on BMI’s macroeconomic database, was US$3,384bn. Mexico and Brazil together accounted for an estimated 63.2% of regional retail sales in 2009. Their combined share is expected to rise to 64.8% by 2014. For Brazil, the estimated 2009 market share of 32.7% is expected to rise to 34.2% by 2014.
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