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Colombia Retail Report Q4 2011
Business Monitor International, Sep 2011, Pages: 62
The Q411 BMI Colombia Retail Report forecasts that the country’s retail sales will grow from an estimated COP235,922bn (US$119.96bn) in 2011 to COP330,783bn (US$168.19bn) by 2015, a rise of more than 40%. Underlying economic growth, a young and increasingly urban population, rising disposable income and more working women are key factors behind the forecast growth in Colombia’s retail sales.
Colombia’s nominal GDP is predicted to be US$327.12bn in 2011, with growth of 4.6% expected for the year. Average annual GDP growth of 4.6% is predicted by BMI between 2011 and 2015. With the population increasing from an expected 46.9mn in 2011 to an estimated 49.3mn by 2015, GDP per capita is forecast to rise 29% by the end of the forecast period, reaching US$9,001.
Domestic demand will continue to be the key driver of GDP growth, with improvements in the security outlook feeding through to increased consumer and investor confidence. Although Colombia did not reach its target of 4mn tourist arrivals in 2009 due to factors such as the H1N1 virus and the global economic crisis, it still achieved 16% growth in the number of foreign visitors, while the world average contracted by 4%.
In 2005, 64.4% of the Colombian population was described by the UN as economically active, with 39.2% in the 20-44 age range that is important to retail sales. More than three-quarters of the population were classified by the UN as urban (77.4%). In 2010, the urban population is estimated to have reached almost 80% of the total, with 38.5% aged 20-44 and 67.2% of the population economically active. The retail sector benefits from Colombia’s status as the third most populous country in Latin America.
Retail sub-sectors likely to see strong growth over the period include food and drink, with sales expected to rise by more than 76% between 2011 and 2015, from US$39.04bn to US$68.87bn. Growth in mass grocery retail (MGR) sales is expected to outstrip overall food sales at nearly 83%, with MGR’s share of the overall food market predicted to grow from 33.8% in 2011 to 35.0% by 2015. Modern and sophisticated retail formats are increasingly popular with consumers and further growth is expected, particularly in the hypermarket and smaller supermarket or express store formats.
With rising incomes driving take-up of more advanced medicines and more comprehensive health insurance plans, sales of over-the-counter (OTC) pharmaceuticals are forecast to grow from US$0.58bn in 2011 to US$1.21bn by 2015, a rise of 108%.
Sales of consumer electronic products are forecast at US$4.21bn in 2011, with BMI predicting a rise of 51.4% to US$6.37bn by the end of the forecast period. Consumer electronics spending per capita is projected to rise 45% to about US$115 by the end of the forecast period, following growth in key digital products groups such as computers (which have only 13% penetration), notebook computers and digital TV sets.
Vehicle sales are forecast to rise by 41% over the forecast period, from 302,632 units in 2011 to 426,749 units by 2015.
Retail sales for our Latin American universe in 2011 are expected to reach US$1,338bn, based on varying national definitions. Total consumer spending for the region, based on BMI’s macroeconomic database, is predicted to be US$3,161bn. Brazil and Mexico are expected to account for an estimated 73.9% of regional retail sales in 2011, with the two countries still likely to account for 72.5% of all retail sales in the region by 2015. For Colombia, its predicted 2011 market share of 9.0% is expected to fall to 8.6% by 2015.
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