Venezuela Retail Report Q1 2013

The Venezuelan Retail Report examines the long-term potential of the local consumer market but flags short-term concerns about the impact on Venezuela's economic outlook of high inflation, a lack of investment in the productive sectors of the economy, political risk and an upcoming local currency devaluation.

The report examines how best to maximise returns in the Venezuelan retail market while minimising investment risk, and also explores the impact of deteriorating regional credit risk on the Venezuelan consumer and on the ability of producers and exporters to realise returns in the short term.

The report analyses the growth and risk management strategies being used by the leading players in the Venezuelan retail sector, as they seek to maximise the growth opportunities offered by the local market. Venezuelan per capita consumer spending is forecast to increase by a paltry 0.8% between 2013 and 2016, compared with a regional average of 17%. The country comes fifth (out of seven) in BMI's Latin American Retail Risk/Reward Ratings, and underperforms significantly for risk.

Among all retail categories, consumer electronics will be the strongest performer through to 2016 in growth terms, with sales forecast to increase from US$3.87bn in 2013 to US$4.49bn by 2016, a rise of 16. 0%.

In the competitive arena, BMI sees upside potential in government programmes that provide new financing options for consumers. Venezuela is not one of the largest markets in the region, but the low household penetration of many products suggests there is latent growth potential. The market offers continued growth potential in key digital product groups such as computers (less than 15% penetration), notebook computers and LCD television sets.

Over the past quarter, BMI has revised the following forecasts/views:

?? We have revised up our real GDP growth estimate for Venezuela from 3.5% to 4.7% for 2012, and from 2.2% to 2.6% for 2013. Stronger-than-expected credit-fuelled private consumption and government-financed investment have seen real GDP growth come in above our expectations in H112. However, we believe growth will peak in 2012 and slow over the next few years given persisting economic imbalances and the political risks associated with the country.

?? Higher lending rates, combined with the erosion of purchasing power that will result from the upcoming currency devaluation, lead BMI to believe that real private consumption growth will decline from 5.5% in 2012 to 2.0% in 2013. We therefore forecast private consumption's contribution to real GDP growth to decline from 3.8 percentage points (pp) in 2012 to only 1.9pp in 2013.

?? BMI's forecast for slowing private consumption after the October 2012 presidential election is likely to mean that the current acceleration in retail sales is unsustainable. Information compiled by the Central Bank of Venezuela during the first seven months of 2012 reveals that retail sales grew 8.71% year-on-year (y-o-y). Retail sales peaked in June 2012 at 15.22%.

Table of contents

Chapter - Executive Summary

Chapter - SWOT Analysis

Venezuela Retail Business Environment SWOT

Venezuela Political SWOT

Venezuela Economic SWOT

Chapter - Market Overview

Current Trends

Key Players

Chapter - Industry Forecast Scenario

Consumer Outlook

Retail Growth Outlook

Table: Venezuela Retail Sales Indicators, 2009-2016

Table: Retail Sales Breakdown By Key Segments, 2013f

Organised Retail

Macroeconomic Outlook

Table: Venezuela - Economic Activity

Chapter - Regional Retail Outlook

Table: Latin America Retail Trends, 2009-2016

Table: Regional Retail Sales, 2009-2016 (US$bn)

Table: % Of Regional Retail Sales, 2009-2016

Table: Regional Food Consumption, 2009-2016 (US$bn)

Table: Regional Mass Grocery Retail, 2009-2016 (US$bn)

Regional Retail Trends

Chapter - Risk/Reward Ratings

Table: Regional Retail Business Environment Ratings

Venezuela's Retail Rating

Limits To Potential Returns

Risks To Realisation Of Returns

Chapter - Mass Grocery Retail

Venezuela Mass Grocery Retail Industry SWOT

Market Overview

Leading Retailers

Table: Structure Of Mass Grocery Retail Market – Estimated Number Of Outlets

Table: Structure Of Venezuela's Mass Grocery Retail Market – Sales Value By Format (US$bn)

Table: Average Annual Value Sales By Unit Per Format (2009)

Industry Forecast Scenario

Table: Venezuela Mass Grocery Retail – Value Sales by Format – Historical Data & Forecasts, 2009-2016

Table: Sales Breakdown by Retail Format Type

Industry Developments

Chapter - Consumer Electronics

Venezuela 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

Consumer Electronics Market

Table: Consumer Electronics Overview, 2009-2016 (US$mn)

Industry Developments

Chapter - Automotives

Venezuela Autos Industry SWOT

Industry Forecast Scenario

Sales

Table: Venezuela Autos Sales, 2009-2016

Production

Table: Venezuela Autos Production, 2009-2016

Trade

Table: Venezuela Autos Trade, 2009-2016

Table: Venezuela Car Ownership Rate, 2010-2016

Passenger Cars

Table: Venezuela Passenger Car Segment, 2009-2016

Company News

Chapter - Demographic Outlook

Table: Venezuela's Population By Age Group, 1990-2020 ('000)

Table: Venezuela's Population By Age Group, 1990-2020 (% of total)

Table: Venezuela's Key Population Ratios, 1990-2020

Table: Venezuela's Rural And Urban Population, 1990-2020

Chapter - BMI Methodology

How We Generate Our Industry Forecasts

Sources

Related research categories

By sector: Retail (in Off-trade)

By market: Venezuela (in South America)