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Egypt Retail Report Q4 2012
Business Monitor International, November 2012, Pages: 75
This Egypt Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the economic impact of the country’s budget deficit hitting record lows and monetary policy constrained by the need to avoid further capital outflows.
We examine how best to maximise returns in the Egyptian retail market while minimising investment risk and explore the effects of the deteriorating global economy on the Egyptian consumer and on the ability of producers and exporters to realise returns in the short term.
The report also analyses the growth and risk management strategies being employed by the leading players in the Egyptian retail sector as they seek to maximise the growth opportunities offered by the local market.
Egyptian per-capita consumer spending is forecast to more than double by 2016, compared with a regional growth average of only 2%. The country comes last in BMI’s Middle East and Africa Retail risk/reward ratings, although it outperforms slightly for Reward.
Among all retail categories, autos will be the outperformer through to 2016 in growth terms, with unit sales forecast to increase by 126% between 2012 and 2016, from 185,608 units to 312,555 units.
However, sales growth in the short term is likely to be constrained, with latest automobile sales figures from Ghabbour Auto (which has a 40% share of the Egyptian market) showing the number of units sold between January-March 2012 remaining below 2009 levels.
Car ownership in Egypt is estimated at around 23 cars per 1,000 people, compared with 35 per 1,000 in Iran and more than 100 per 1,000 in Saudi Arabia, which means the country has considerable room for growth. In the competitive arena, BMI sees upside potential in trade tariff reform between Egypt and the EU, which will open the market for more overseas manufacturers and expand export opportunities for domestic producers.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI has revised down its 2013 real GDP growth forecast. In light of ongoing uncertainty in the political environment, we believe investment will remain weaker than previously anticipated.
We project the economy expanding 3.1% in FY2012/13, compared with an estimated 2.3% in FY2011/12.
- Throughout Egypt's political turmoil, household spending has remained relatively strong.
According to latest data, private consumption – which accounts for more than 70% of the economy – expanded 7.3% y-o-y and 4.5% in real terms in FYQ3 and FYQ2 respectively.
Strong remittance inflows are playing an integral role in this respect, with latest data showing private transfer credits hitting an all-time high of US$4.8bn between January-March. BMI expects these capital inflows to remain relatively strong over the coming quarters.
Executive Summary 5
SWOT Analysis 7
Egypt Retail Business Environment SWOT 7
Egypt Political SWOT 8
Egypt Economic SWOT 9
Market Overview 10
Current Trends 12
Key Players 14
Industry Forecast Scenario 17
Consumer Outlook 17
Retail Growth Outlook 20
Table: Egypt’s Retail Sales Indicators, 2009-2016 21
Table: Retail Sales Breakdown By Key Segment, 2012f 23
Macroeconomic Outlook 23
Table: Egypt – Economic Activity 25
Regional Retail Outlook 26
Table: Middle East And Africa Retail Trends, 2009-2016 26
Table: Middle East And Africa Regional Retail Sales, 2009-2016 (US$bn) 26
Table: Share Of Regional Retail Sales, 2009-2016 (%) 27
Current Trends 27
Risk/Reward Ratings 37
Middle East And Africa Risk/Reward Ratings 37
Table: Regional Retail Risk/Reward Ratings 38
Egypt’s Retail Rating 38
Limits To Potential Returns 38
Risks To Realisation of Returns 39
Mass Grocery Retail 40
Egypt Mass Grocery Retail Industry SWOT 40
Market Overview 41
Leading Retailers 41
Industry Forecast Scenario 42
Table: Mass Grocery Retail Sales By Format, % 43
Table: Mass Grocery Retail Sales – Historical Data & Forecasts 43
Industry Developments 44
Consumer Electronics 47
Egypt Consumer Electronics Market SWOT 47
Market Overview 48
Table: PC Sales, 2009-2016 48
Table: AV Sales, 2009-2016 51
Mobile Handsets 53
Table: Mobile Communications, 2009-2016 53
Industry Forecast Scenario 57
Consumer Electronics Market 57
Table: Consumer Electronics Overview, 2009-2016 57
Industry Developments 59
Egypt Auto Industry SWOT 61
Industry Forecast Scenario 62
Table: Egypt Autos Sales 64
Table: Egypt Autos Trade 65
Company Developments 66
Passenger Cars 66
Table: Top 10 Best Selling Models in Egypt, January-October 2011 67
Demographic Outlook 69
Table: Egypt's Population By Age Group, 1990-2020 ('000) 70
Table: Egypt's Population By Age Group, 1990-2020 (% of total) 71
Table: Egypt's Key Population Ratios, 1990-2020 72
Table: Egypt's Rural And Urban Population, 1990-2020 72
BMI Methodology 73
How We Generate Our Industry Forecasts 73