Colombia Retail Report Q2 2012

The Q212 BMI Colombia retail report forecasts that the country’s retail sales will grow from an estimated COP257.80trn (US$131.05bn) in 2012 to COP368.70trn (US$187.43bn) by 2016, a rise of 43%.

Underlying economic growth, a young and increasingly urban population, rising disposable income and more women in employment are key factors behind the forecast growth in Colombia’s retail sales.

Colombia’s nominal GDP is predicted to be US$350.8bn in 2012, with real GDP growth of 4.5% expected for the year.

Average annual real GDP growth of 4.6% is predicted by BMI between 2012 and 2016.

With the population increasing from an expected 47.6mn in 2012 to an estimated 50.0mn by 2016, GDP per capita is forecast to rise about 30% to US$9,614 by the end of the forecast period.

Domestic demand will continue to be the key driver of GDP growth, with improvements in the security outlook feeding through to increased consumer and investor confidence.

Between 2001 and 2010, foreign tourist arrivals increased from 1.7mn to 2.8mn, with tourism revenues growing from US$1.5bn to US$2.8bn over the same period.

However, internationally, Colombia ranks only 77th on the list of top tourism destinations.

Its goal is to enter the top 50 by 2014, according to Sergio Diaz-Granados, Colombia’s Minister of Commerce, Industry, and Tourism.

Public investment in the tourism sector between 2002 and 2006 was US$33bn, while between 2006 and 2010 it was US$263bn.

In 2005, 64.4% of the Colombian population was described by the UN as economically active, with 39.2% in the 20-44 age range that is important to retail sales.

More than three-quarters of the population were classified by the UN as urban (77.4%).

In 2010, the urban population is estimated to have reached almost 80% of the total, with 38.5% aged 20-44 and 67.2% of the population economically active.

The retail sector benefits from Colombia’s status as the third most populous country in Latin America.

Retail sub-sectors likely to see strong growth over the period include food and drink, with sales expected to rise by nearly 65% between 2012 and 2016, from US$39.80bn to US$65.49bn.

Growth in mass grocery retail (MGR) sales is expected to outstrip overall food sales at 68%, with MGR’s share of the overall food market predicted to grow from 33.3% in 2012 to 34.0% by 2016.

Modern and sophisticated retail formats are increasingly popular with consumers and further growth is expected, particularly in the hypermarket and smaller supermarket or express store formats.

With rising incomes driving take-up of more advanced medicines and more comprehensive health insurance plans, sales of over-the-counter (OTC) pharmaceuticals are forecast to grow from US$0.67bn in 2012 to US$0.92bn by 2016, a rise of more than 38%.

Sales of consumer electronic products are forecast at US$4.89bn in 2012, with BMI predicting a rise of 50.9% to US$7.38bn by the end of the forecast period.

Consumer electronics spending per capita is projected to rise 45% to about US$115 by the end of the forecast period, following growth in key digital products groups such as computers (which have only 14% penetration), notebook computers and digital TV sets.

Vehicle sales are forecast to rise by almost 39% over the forecast period, from 346,344 units in 2012 to 480,480 units by 2016.

Retail sales for our Latin American universe in 2012 are expected to reach US$1.47trn, based on varying national definitions.

Total consumer spending for the region, based on BMI’s macroeconomic database, is predicted to be US$3.24trn.

Brazil and Mexico are expected to account for an estimated 72.9% of regional retail sales in 2012, with the two countries still likely to account for 71.3% of all retail sales in the region by 2016 – and Venezuela accounting for another sizeable 12.7%.

For Colombia, its predicted 2012 market share of 8.9% is expected to rise to 9.0% by 2016.