Business

Latin America - A Retail Hotspot

Latin America has three of the top 10 countries worldwide primed for retail expansion - Brazil, Uruguay and Chile - according to a recent report by the global real estate firm, JLL. As many of the Latin Americans work their way up the social and income ladder, spending on personal goods has increased along with demand for credit and finance. Some 63 million people in Latin America have entered the middle class over the past decade. In the case of Chile, its poverty levels have reduced from 38% to 8% of the population while its GDP per capita soared from US$ 5,800 to US$ 23,000. "With the highest level of internet penetration in Latin America, ecommerce is also gaining traction"

Many American brands are targeting Latin America, among them Nike, Old Navy, Skechers and American Eagle who see opportunities for growth in countries like Mexico, Argentina and Columbia.

To give the example of a small country like Chile, with a population of just 17.6 million, Chile punches well above its weight when it comes to its retail industry, thanks in a large part to a swelling middle class, competitive business environment and its increasingly sophisticated retail infrastructure. By a wide variety of indicators, therefore, Chile's retail industry is something Indian exporters should not ignore.

As many Chileans work their way up the social and income ladder, spending on personal goods has increased along with demand for credit and finance. Youth demographics also favour the retail sector, with approximately 40% of the country's population aged between 15 and 39. The result: an increasingly young, and affluent, middle class with an appetite for international brands.

More telling for Chile's consumer potential are the country's recent retail sales - they were up 1.1% in June despite a decline in other sectors. In April retail sales growth hit 7.9% - the fastest monthly growth in two and a half years. What's more, in 2015, the country came third in A.T. Kearney's Global Retail Development Index, a ranking of the top 30 developing countries for retail investment worldwide.

Chile's appeal is further boosted by its pro-business stance, characterised by low levels of corruption, regulatory and legal transparency and high investor confidence. In fact, such is the confidence in the market that earlier this year, Falabella, Chile's largest department store chain - and perhaps the easiest route for exporters to access Chile's consumer market - unveiled plans to invest US$ 4 billion over the next three years, opening up 131 new stores and 10 shopping malls across Latin America.

But Chile's retail expansion doesn't stop there. New store formats, such as small boutiques and low-budget stores, are expanding to suburban areas as speed and convenience become increasingly important concepts to consumers. What's more, with the highest level of internet penetration (72.3%) in Latin America, ecommerce is also gaining traction.