Brazil Retail Report Q2 2012 Published : March 2012
No. of Pages : 91
Price: US$530
The BMI Brazil retail report forecasts that the country’s retail sales will grow by nearly 43% between 2012 and 2016, from BRL1.59trn (US$866.36bn) to BRL2.27trn (US$1.24trn). Generally positive trends in underlying economic growth, an enormous and growing population and rising disposable income are key factors behind the forecast growth in Brazil’s retail sales. Easier access to credit and the emergence of a wealthier middle class are also likely to help the value of the retail segment increase during the forecast period. Brazil’s nominal GDP is predicted to be US$2,485.46bn in 2012, with real GDP growth of 3.9% expected for the year. Average annual real GDP growth of 4.2% is predicted by BMI between 2012 and 2016. With the population forecast to increase from 198mn in 2012 to 205mn by 2016, GDP per capita is forecast to rise 16.6% to US$14,609 by the end of 2016. The national monthly minimum wage increased by 26% in real terms between 2003 and 2006, and in 2011 the average annual salary is expected to be US$10,697. The lifestyles of middle and upper-income groups increasingly mirror those of their counterparts in developed countries and overall purchasing power has been increasing. Although a quarter of the Brazilian population still lives on or below the poverty line, according to the UN Economic Commission for Latin America and the Caribbean (ECLAC), between 2001 and 2009 Brazil cut its poverty rate to 24.9% from 37.5%. Increases in the minimum wage and additional funding for welfare programmes mean that incomes in the north (the poorest part of the country) have been growing at double the rate of those in the south, and the region offers very significant growth opportunities. In addition, President Dilma Rousseff is committed to continuing social welfare programmes such as the bolsa familia (family allowance), which has considerably raised the spending power of Brazil’s low-income population. In 2005, 67.8% of the Brazilian population was described by the UN as economically active, with 40.3% in the 20-44 age range, which is vital for retail sales. More than 84% of the population was classified by the UN as urban. By 2015, the urban population is forecast to exceed 88%, with 39.5% aged 20-44 and 66.9% of the population expected to be economically active. The non-grocery sector is outperforming the food sector as consumers increase their spending on household items and durable goods such as furniture, domestic appliances, cars and clothes. Easier access to credit is also proving to be good news for the retail sector. There were 118mn credit cards in Brazil in 2007, up from 44mn in 2003, according to Banco Central do Brasil (BCB). Retail sub-sectors that are expected to show strong growth over the forecast period include food and drink, with sales predicted to rise from an expected US$238.85bn in 2012 to US$384.0bn by 2016, a rise of nearly 61%. Mass grocery retail (MGR) sales are forecast to rise from an expected US$97.44bn in 2012 to US$157.47bn, an increase of 61.6%. Supermarkets will continue to take the lion’s share of sales by value, but of increasing importance are the convenience, discount and hypermarket formats, which are all expected to register significantly more rapid growth over the forecast period. Automotive sales are forecast to increase by almost 29% during the same period to reach 5.0mn units sold in 2016, with domestic demand stimulated by government intervention, tariff protection, tax concessions and preferential vehicle financing terms.
The consumer electronics sector offers growth potential in key digital products groups such as computers, digital cameras (which both have less than 30% penetration) and LCD TV sets. It is predicted to grow by more than 43% between 2012 and 2016, from US$33.31bn to US$47.66bn.