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Latin America Retail Forecasts Top 25 Retailers

Latin America Retail Forecasts Top 25 Retailers

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Published by Aaron Chio
RNG's coverage in Latin America: we closely track, monitor, & forecast over $200 billion dollars in chain retail sales accounting for close to 20% of formal retail sales in a region with a combined GDP of more than $3.5 trillion dollars.
RNG's coverage in Latin America: we closely track, monitor, & forecast over $200 billion dollars in chain retail sales accounting for close to 20% of formal retail sales in a region with a combined GDP of more than $3.5 trillion dollars.

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Published by: Aaron Chio on Apr 28, 2009
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09/13/2010

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RETAILNETGROUP STRATEGY ALERTRNG's Latest Chain Retail Forecasts for Latin AmericaApril 2009
 
Greetings!
 We recently completed a major update for our chain retailer database in Latin America and wanted to briefly highlighta few of the themes we came across during our update.For those not familiar with RNG's coverage in Latin America,
we closely track, monitor, & forecast over $200billion dollars in chain retail sales
accounting for close to 20% of formal retail sales in a region with a combinedGDP of more than $3.5 trillion dollars.Please read on for the five biggest themes coming out of from our update. Subscribers can access these detailedviews at the banner & market level atretailnetgroup.com.As always, please reach out with any questions or concerns - we are here to help.Sincerely,Aaron Chio Senior AnalystRetailNet Group
I. Chain retail sales will slow down significantly...
... but continue to grow sales & share. (Figure 1)Despite talks of potential deflation in developed markets, inflation still remains high throughout most of Latin America.In addition, currency depreciations will impact prices of imported goods, further pressuring costs & price pointshigher. These two things should somewhat offset economic slowdown in the region - at least nominally.Nonetheless, RNG is still forecasting a
marked slowdown in sales & store growth across the board
down fromdouble digit, 11.9%, to single digit, 6.9%, sales growth for chain retailers.
Figure 1: Sales & stores forecasts, Top 25 retailers in Latin America 
 
 
 
Source: RNG Database
(click image to enlarge)
II
.
Retailers still opening stores...
 
... just at a slower pace (Figure 2).Despite credit tightening & tougher market conditions, retailers are still opening stores--albeit at a significantly slowerpace. The key difference between what we are seeing in the US (dozens of retailers going bankrupt and closingthousands of stores) and Latin America is that the latter is
not nearly as over-developed as the US, particularlyaround category specialists
.The chart below compares 2007 openings vs. 2009E store openings, showing that
a higher number of bannersopened more stores in 2007 than we expect for 2009E
. In other words, while 205 banners opened two or morestores in 2007 only 143 banners will do the same in 2009E - that's a 30% difference from '07 vs '09E.
Figure 2: Fewer banners to open fewer stores in 2009E.
 
 
Source: RNG Database
III. Share continues to concentrate
The Top 10 retailers in Latin America accounted for 45% of RNG's chain retail database in 2006, and theirshare will continue to grow to as much as 54.6% by 2013E
(See Figure 3).Acquisitions & retail consolidation across markets are two key drivers here (click the slide below for summary sampleof key developments). In addition, we see more and more retailers going after different shopping trip occasions & socio-economic segments, further consolidating sales in the markets where they operate while expanding into newgeographies.
Figure 3: Share of RNG's chain retail sales 
 

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