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The Brazilian Retail Report examines the long-term potential of the local consumer market, but flags short-term concerns about the impact on Brazil’s economic outlook of structural economic imbalances.
The report examines how best to maximise returns in the Brazilian retail market while minimising investment risk, and also explores the impact of deteriorating regional credit risk on the Brazilian consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Brazilian retail sector, as they seek to maximise the growth opportunities offered by the local market.
Brazilian per capita consumer spending is forecast to increase by a modest 13% to 2016, compared with a regional growth average of 19%. The country comes first in BMI’s LatAm Retail Risk/Reward Ratings, although it underperforms slightly for Risk.
Among all retail categories, Mass Grocery Retail (MGR) will be the outperformer through to 2016 in growth terms, with sales forecast to increase by nearly 62% between 2012 and 2016, from US$97.44bn to US$157.47bn. Hypermarkets and supermarkets have gradually taken market share from traditional stores in recent years, with the latter accounting for more than 62% of MGR sales in 2012.
In the competitive arena, BMI sees upside potential in the Growth Acceleration Programme, aimed at increasing infrastructure-related investment via tax incentives and large public and private investments.
The planned measures, if successful, could ease retailers’ logistical problems, which are mainly caused by poor road networks in many parts of the country.
Over the last quarter, BMI has revised the following forecasts/views:
The Brazilian Retail Report examines the long-term potential of the local consumer market, but flags short-term concerns about the impact on Brazil’s economic outlook of structural economic imbalances.
The report examines how best to maximise returns in the Brazilian retail market while minimising investment risk, and also explores the impact of deteriorating regional credit risk on the Brazilian consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Brazilian retail sector, as they seek to maximise the growth opportunities offered by the local market.
Brazilian per capita consumer spending is forecast to increase by a modest 13% to 2016, compared with a regional growth average of 19%. The country comes first in BMI’s LatAm Retail Risk/Reward Ratings, although it underperforms slightly for Risk.
Among all retail categories, Mass Grocery Retail (MGR) will be the outperformer through to 2016 in growth terms, with sales forecast to increase by nearly 62% between 2012 and 2016, from US$97.44bn to US$157.47bn. Hypermarkets and supermarkets have gradually taken market share from traditional stores in recent years, with the latter accounting for more than 62% of MGR sales in 2012.
In the competitive arena, BMI sees upside potential in the Growth Acceleration Programme, aimed at increasing infrastructure-related investment via tax incentives and large public and private investments.
The planned measures, if successful, could ease retailers’ logistical problems, which are mainly caused by poor road networks in many parts of the country.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI remains above consensus on growth in 2012 at 3.9%. Two main dynamics support our aboveconsensus view: the authorities’ desire to support consumption and growth through continued fiscal and monetary stimulus; and a robust fixed investment outlook for the country. We remain below consensus on growth in 2013 at 3.7%.
- BMI believes private consumption will remain relatively strong in 2012 on the back of continuing fiscal and monetary stimulus, adding 2.0 percentage points (pp) to GDP. This is supported by 275 basis points (bps) of cuts in the Selic rate since August 2011, and our forecast for an additional 100bps of cuts by year end, as the central bank has signalled that it is willing to accept modestly higher inflation in order to bring down Brazil's restrictively high interest rates.
- BMI’s forecast for relatively strong private consumption has been reinforced by signs of rising demand since the beginning of 2012 – January’s retail sales reading surprised to the upside, coming in at 7.3% y-o-y. However, retail sales have struggled in the past two months amid concerns about the ongoing European debt crisis and a slowing global economy. Sales were flat in February, while the month-onmonth (m-o-m) rise in March was just 0.2%.
Executive Summary
SWOT Analysis
Brazil Retail Business Environment SWOT
Brazil Political SWOT
Brazil Economic SWOT
Market Overview
Current Trends
Key Players
Industry Forecast Scenario
Consumer Outlook
Retail Growth Outlook
Table: Brazil Retail Sales Indicators, 2009-2016
Table: Retail Sales Breakdown By Key Sectors, 2012f
Macroeconomic Outlook
Brazil - Economic Activity, 2011-2016
Regional Retail Outlook
Table: Latin America Retail Trends, 2009-2016
Table: Regional Retail Sales, 2008-2016 (US$bn)
Table: % Of Regional Retail Sales, 2008-2016
Table: Regional Food Consumption, 2008-2016 (US$bn)
Table: Regional Mass Grocery Retail, 2008-2016 (US$bn)
Regional Retail Trends
Risk/Reward Ratings
Table: Latin America Retail Business Environment Ratings
Brazil’s Retail Rating
Limits To Potential Returns
Risks To Realisation Of Returns
Mass Grocery Retail
Brazil Mass Grocery Retail Industry SWOT
Market Overview
Table: Structure of Brazil's Mass Grocery Retail Market By Estimated Number of Outlets
Table: Structure of Brazil's Mass Grocery Retail Market - Sales by Format (US$bn)
Table: Structure of Brazil's Mass Grocery Retail Market - Sales by Format (BRLbn)
Table: Average Annual Sales Value by Format - 2009
Table: Sales Breakdown by Retail Format Type (%)
Industry Forecast Scenario
Table: Brazil Mass Grocery Retail - Value Sales by Format - Historical Data & Forecasts, 2009-2016
Table: Sales Breakdown By Retail Format, 2010 And 2020 (%)
Industry Developments
Consumer Electronics
Brazil Consumer Electronics Market SWOT
Market Overview
Computers
Table: PC Sales, 2009-2016
AV Devices
Table: AV Sales, 2009-2016
Mobile Handsets
Table: Mobile Communications, 2009-2016
Industry Forecast Scenario
Table: Consumer Electronics Overview, 2009-2016
Industry Developments
Automotives
Brazil Autos Industry SWOT
Market Overview
Industry Forecast Scenario
Table: Brazil Autos Sales By Segment – Historical Data And Forecasts, 2010-2016
Industry Developments
Demographic Outlook
Table: Brazil's Population By Age Group, 1990-2020 ('000)
Table: Brazil's Population By Age Group, 1990-2020 (% of total)
Table: Brazil's Key Population Ratios, 1990-2020
Table: Brazil's Rural And Urban Population, 1990-2020
BMI Methodology
How We Generate Our Industry Forecasts
Sources
SWOT Analysis
Brazil Retail Business Environment SWOT
Brazil Political SWOT
Brazil Economic SWOT
Market Overview
Current Trends
Key Players
Industry Forecast Scenario
Consumer Outlook
Retail Growth Outlook
Table: Brazil Retail Sales Indicators, 2009-2016
Table: Retail Sales Breakdown By Key Sectors, 2012f
Macroeconomic Outlook
Brazil - Economic Activity, 2011-2016
Regional Retail Outlook
Table: Latin America Retail Trends, 2009-2016
Table: Regional Retail Sales, 2008-2016 (US$bn)
Table: % Of Regional Retail Sales, 2008-2016
Table: Regional Food Consumption, 2008-2016 (US$bn)
Table: Regional Mass Grocery Retail, 2008-2016 (US$bn)
Regional Retail Trends
Risk/Reward Ratings
Table: Latin America Retail Business Environment Ratings
Brazil’s Retail Rating
Limits To Potential Returns
Risks To Realisation Of Returns
Mass Grocery Retail
Brazil Mass Grocery Retail Industry SWOT
Market Overview
Table: Structure of Brazil's Mass Grocery Retail Market By Estimated Number of Outlets
Table: Structure of Brazil's Mass Grocery Retail Market - Sales by Format (US$bn)
Table: Structure of Brazil's Mass Grocery Retail Market - Sales by Format (BRLbn)
Table: Average Annual Sales Value by Format - 2009
Table: Sales Breakdown by Retail Format Type (%)
Industry Forecast Scenario
Table: Brazil Mass Grocery Retail - Value Sales by Format - Historical Data & Forecasts, 2009-2016
Table: Sales Breakdown By Retail Format, 2010 And 2020 (%)
Industry Developments
Consumer Electronics
Brazil Consumer Electronics Market SWOT
Market Overview
Computers
Table: PC Sales, 2009-2016
AV Devices
Table: AV Sales, 2009-2016
Mobile Handsets
Table: Mobile Communications, 2009-2016
Industry Forecast Scenario
Table: Consumer Electronics Overview, 2009-2016
Industry Developments
Automotives
Brazil Autos Industry SWOT
Market Overview
Industry Forecast Scenario
Table: Brazil Autos Sales By Segment – Historical Data And Forecasts, 2010-2016
Industry Developments
Demographic Outlook
Table: Brazil's Population By Age Group, 1990-2020 ('000)
Table: Brazil's Population By Age Group, 1990-2020 (% of total)
Table: Brazil's Key Population Ratios, 1990-2020
Table: Brazil's Rural And Urban Population, 1990-2020
BMI Methodology
How We Generate Our Industry Forecasts
Sources