Retail. Who doesn’t like to spend? We all treat ourselves from time to time and so we should. Of course, January is the month after the Christmas spent, but also the time for sales par excellence. In Britain we are lucky to have such an amazing array of good quality brands to choose from. And on the exporting side, our brands do well.
Latin America presents great opportunities for UK retailers. It has a growing middle class which has now reached almost 300 million. This is set to rise by 60-70% in the next two decades. In the 2013 GRDI (Global Retail Development Index), Brazil, Chile and Uruguay take the top three spots, with Peru, Colombia, Panama and Mexico also making the ranking.
It’s easier to see why. Brazil remains in a strong position. Even if its growth is slowing, retail spending is expected to increase. This is partly due to infrastructure improvement, FDI and consumer confidence. The Brazilian middle class counts as 56% of its population (113m in 2014). Aside from Sao Paulo and Rio de Janeiro, spending is increasing in cities in the North and the North East. The FIFA World Cup this year and the Olympic Games in 2016 bring more retail opportunities as new shopping centres are built and airports get a revamp.
Chile slips in quietly, but actually its economic growth has been rising over the past twenty years. Disposable income is increasing at an annual rate of 10% and the spending on clothing is at 20%. Chile is one of the easiest country to do business in Latin America and with the biggest shopping centre in South America– the Costanera Centre – their love for British products is well established.
Uruguay has seen an increase in real estate, both in the capital Montevideo and in resorts such as Punta del Este. Political stability in the country means a strong influx of tourists and a steady economic growth.
GDP in Peru and Colombia continue to grow. In Peru the average growth ranks at 7% whereas in Colombia is at 4.2%. However it is the long term growth of these two Countries that we should watch the most. Both Countries are implementing sustainable economic policies to make sure this trend continues.
In Peru the emerging middle class is currently 9m and rising. The Country also has 50 shopping centres with a plan to develop further 33 which will present UK retail industry with opportunities to have a presence there.
In Colombia, Bogota is the biggest market for luxury goods in Latin America. It has more than 60 shopping centres selling international brands. This puts the actual luxury sector in Colombia valued at US $250m. The UK government recently launched UK Colombia Trade, a new business-to-business entity designed to support UK companies to do business in Colombia. One of the main areas of focus will be retail.
All the other markets in Latin America –Mexico, Panama, Argentina, Venezuela, The Dominican Republic and Ecuador– are worth watching. They are all planning and implementing sustainable economic policies to encourage FDI, growth and domestic spending.
With all these people loving our brands, I think UK retailers can feel optimistic about their cash register, what do you reckon?
To find retail opportunities in Latin America, register for free alerts by UKTI Business Opportunities Service.
UKTI Business Opportunities Service and the Foreign Office Prosperity Directorate work to bring you the best opportunities and insights into global markets. Check the Overseas Business Risk service here.