BMI View: Consumer confidence in Colombia remains dented as a result of the impact of lower commodity prices and the weak peso. Recent increases in both inflation and unemployment rates will do nothing to improve consumer confidence, further dampening household spending on non-essentials and larger retail purchases. With any significant improvements in the macroeconomic environment looking less likely this year, the strong growth potential of the Colombian economy will remain muted.
|Headline Household Spending|
|e/f = BMI estimate/forecast. Source: BMI, DANE Colombia|
Key Views And Developments
Colombia-based retailer Home Sentry opened its 11th department store in April 2016, in Cali, at an investment of COP35,000mn.
Chilean retailer Falabella, announced recently that it aims to triple its sales and double the number of its stores in Colombia by 2018 through an investment programme totalling USD200mn.
We have revised up our end-2016 policy rate forecast to 7.75% from 7.00% previously in light of the latest rate decision by the central bank, and we no longer expect interest rate cuts to start later this year ( see 'Hiking Cycle Nearing Its Peak', June 7).
Low oil prices, which saw the Colombian peso become one of the worst-performing EM currencies, and supply-driven shocks affecting food prices, saw headline inflation reach 9.0% y-o-y in July, its highest level in almost 16 years.
The unemployment rate in Colombia increased above expectations to reach 9.8% in July 2016, up nearly one percentage point on the previous month and showing its highest reading since March. This, together with the country's high inflation rate looks set to dampen household spending levels for the remainder of 2016.
The Colombia Retail Report has been researched at source and features BMI Research'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 Colombia 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 Colombia to test other views - a key input for successful budgeting and strategic business planning in the Colombian retail market.
- Target business opportunities and risks in Colombia 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 (local currency and USDbn, % growth, % GDP, per capita, per household), spending by retail sector (food & non-alcoholic drink, alcoholic drink, clothing & footwear, housing & utilities, furnishings & home, health, transport, recreation, education, restaurants & hotels, personal care & insurance (local currency and USDbn, % growth, % GDP, % of total spending)
- Retail Sector Forecast: Breakdown of Food, Non Alcoholic Drink, Alcohol, Tobacco, Clothing, Footwear, Household Goods, Furnishings, Appliances, Glass and Tablewear, Household Textiles, Consumer Electronics, Garden Toys and Pets, Home and Garden tools, Personal Care, Personal Effects Spending (USDbn, % 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 – USD5000+, USD10,000+ USD50000+ (‘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).
BMI’s Retail Risk Reward Index
BMI’s Risk Reward Indices provide investors looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
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.
The Retail Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.