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Chile Retail Report Q1 2012
Business Monitor International, Jan 2012, Pages: 88
Business Monitor International's Chile Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Chile's retail industry.
The Q112 BMI Chile retail report forecasts that the country's retail sales will grow from US$52.99bn in 2011 to US$60.69bn in 2015, an increase of 14.5%. High consumer spending power, well developed physical infrastructure and a business-friendly regulatory environment are key factors behind the forecast growth in Chilean retail sales. Chile's nominal GDP is predicted to be US$244.7bn in 2011, with growth of 5.9% expected for the year.
Average annual GDP growth of 4.0% is forecast by BMI between 2011 and 2015. With the population forecast to increase from 17.3mn in 2011 to 18.0mn by 2015, GDP per capita is forecast to rise to US$20,230.
In 2005, 66.4% of the Chilean population was described by the UN Population Division as economically active, with 37.5% in the crucial 20-44 age group, which is vital for retail sales. The majority of Chileans live in urban areas (87.7%) according to the UN data, with 40% of the population living in the Santiago metropolitan area alone. By 2015, the urban population is forecast to account for more than 90% of the total, with 37.3% aged 20-44 and 68.6% of the population expected to be economically active.
Chile's youth population is driving demand for consumer goods, with 3.34% of the household budget spent on clothes in 2007, according to Instituto Nacional de Estadística (INE). This was the highest spending category after cars, rent and public transport.
We believe the government's social programmes and rising income across the board will lead to a fall in income inequality over the next few years, significantly increasing the potential profit of consumer industries and the investment appeal of the Chilean economy.
Retail sub-sectors expected to show strong growth over the forecast period include food and drink, with sales forecast to rise from an expected US$25.04bn in 2011 to US$36.32bn by 2015, a rise of 45%. With mass grocery retail (MGR) penetration levels comparatively low and scope for expansion beyond Santiago, sales at MGR outlets are expected to grow by nearly 40% over the period, from US$20.40bn in 2011 to US$28.47bn by 2015.
BMI forecasts over-the-counter (OTC) pharmaceutical sales to increase from US$0.57bn in 2011 to US$0.75bn by the end of the forecast period, up by more than 32% as the ageing population and growing disease burden drive pharmaceutical market growth.
Consumer electronic products sales are forecast to rise by nearly 27%, from US$2.78bn in 2011 to US$3.52bn by 2015. Chile's consumer electronics markets is one of the most sophisticated in Latin America as a result of GDP per capita being higher than in Argentina or Brazil. The Chilean market offers continued growth potential in key digital product groups such as computers (which have lower than 20% penetration), notebooks and LCD TV sets.
Automotive sales are forecast to rise by nearly 42% to 527,644 units by 2015. We adjusted our forecasts for vehicles sales as a result of the stronger than expected recovery of domestic demand following the global financial crisis and expect vehicle sales growth to average 8% year-on-year (y-o-y) between 2011 and 2015.
Foreign travel and tourists have stimulated increasingly consumerist attitudes and consumption in recent years. While global tourism declined by 4% in 2009, according to the World Tourism Organisation (UNWTO), figures from INE show 2-3% growth in tourist arrivals to Chile in 2009. In the peak month of January that year, revenue from foreign tourists rose by 9% y-o-y, with arrivals from Argentina up by an even more impressive 22%. Domestic tourism revenues rose by 8%.
Servicio Nacional de Turismo (Sernatur) director Oscar Santelices told Reuters he hoped revenue would remain at the 2008 level of US$2bn in 2009 and that investment in tourism projects would hold up at about US$800mn. It is estimated that revenue will reach US$2.7-4.0bn by 2012, an increase from US$1.80bn in 2007.
Retail sales for our Latin American universe in 2011 are expected to reach US$1,344bn, based on varying national definitions. Total consumer spending for the region, based on BMI's macroeconomic database, is predicted to be US$3,004bn. Brazil and Mexico are expected to account for an estimated 74.0% 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 Chile, its predicted 2011 market share of 3.9% is expected to fall to 3.1%.
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