BMI View: Rising incomes and an increasing number of middle class households make Venezuela's retail market attractive. However, these plus points are overshadowed by the uncertain business environment and economic instability.
The new Venezuelan Retail Report provides an extensive and comprehensive forecast of various retail indicators including household spending, and headline total spending across each retail sub-sector, household income and employment forecasts, demographic forecasts, and a detailed breakdown of household and per capita spending across a large number of retail areas.
We are forecasting real GDP growth of just 1.2% in 2014, in the face of high inflation and the challenges posed to the business environment by the government. This growth rate is far below the average 5.8% seen over the past decade, but above our 2013 estimation of 2.0% growth.
Although Venezuela's retail sector has benefited from relatively high GDP growth over the last decade, with much expansion seen in the areas of mass grocery retail (MGR) and shopping malls, the industry now has a range of problems with which to contend.
The business environment, specifically government policy, is unpredictable, and the threat of expropriation remains real. Meanwhile the state is heavily involved in various aspects of the retail industry, subsidising and running MGR chains, which creates a highly uneven playing fields for private-sector firms in the market, as wells as setting rental rate maximums for commercial real estate, which has affected mall operators.
Meanwhile high inflation, which seriously erodes purchasing power, exchange rate issues, and shortages of basic goods all make it difficult for retailers to operate in Venezuela.
In the short term, therefore, although we see good growth in household incomes, and an increasing number of middle class Venezuelan's with disposable incomes, the risks in the market remain great, and we are not seeing much interest from international...
The Venezuela Retail Report has been researched at source and features Business Monitor International (BMI)'s independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.
BMI's Venezuela Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.
- Benchmark BMI's independent retail industry forecasts for Venezuela to test other views - a key input for successful budgeting and strategic business planning in the Venezuelan retail market.
- Target business opportunities and risks in Venezuela through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, plus a discussion of major industry developments and a snapshot of key short-term demand-driving macroeconomic movements.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the retail sector and within the broader political, economic and business environment.
BMI Industry Forecasts
There are four separate 5-year forecast modules in the retail reports. These are:
Headline Retail Forecast: Total Household Spending, (US$bn and local currency, % growth, % GDP, per capita, per household); Spending by Retail Sector for: food and non-alcoholic drink, alcoholic drink, clothing and footwear, housing and utilities, furnishings and home, health, transport, recreation, education, transport, restaurants and hotels, personal care and insurance (US$bn and local currency, % growth, % GDP, % of total spending)
Retail Sector Forecast: Breakdown of Food, Non Alcoholic Drink, Alcohol, Tobacco, Clothing, Footwear, Household Goods, Furnishings, Appliances, Glass and Tableware, Household Textiles, Consumer Electronics, Garden Toys and Pets, Home and Garden tools, Personal Care, Personal Effects Spending (US$bn, % Growth);
Household Income and Numbers Forecast: Number of Households (‘000,% growth); gross income per household and per capita; net income per household and per capita; tax and social contributions per capita; breakdown of household incomes – US$5000+, US$10,000+ US$50000+ (‘000, % of total); labour force, employment and unemployment (‘000, % change)
Demographic Forecast: Total population; Babies 0-12 months; Young Children 0-4yrs; Children 5-9yrs; Young Teens and Older Children 10-14yrs; Older Teens 15-19yrs; Adults 21yrs +; Young Adults 21-29yrs; Middle Aged 40-64yrs (‘000, % growth, male, female); Urban Population (‘000, % population); Rural Population (‘000, % population).
Industry Risk Reward Rankings
BMI’s Retail Industry Risk Reward Rankings provide a country-comparative Risk Reward Rankings index aimed at investors in the regional retail market.
The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points.
Provides a detailed country-specific analysis of the key trends and developments in the retail sector as a whole, as well as an assessment of the main drivers affecting the major retail segments including mass grocery retail, fashion, pharmacies, consumer electronics, home improvement and personal care.
The market overview also considers the most effective store formats in a given country and the impact of these factors on the main international and domestic players’ development strategies.
This provides a brief overview of the key players in each subsection of the retail sector including MGR, Fashion, Home Improvement, Consumer Electronics, Pharmacies, and Department Store chains.