BMI View: Our projections have been downgraded for growth rates across all sub-sectors of the retail sector. High inflation is a key driver behind this trend. The government has implemented price controls on certain goods, subsidising basics such as milk and soap . H owever , there are now severe shortages for many basic products and food staples, which has led to many retailers to limit the number of purchases consumers are able to make. The issue of chronic shortages has been compounded by currency controls which have restricted the number of dollars available for the purchase of imports.
As a result of high inflation and a chronic shortage of basic goods in Venezuela, together with an unstable economic outlook we maintain our negative outlook for household spending trends over the remainder of 2015 and the first half of 2016, and this will weigh on the retail sector's growth potential. Moreover, the tough regulatory environment looks set to remain a barrier to entry for international investors within the retail sector until 2019, while the difficulties surrounding importing items poses a significant risk, as does the ever thriving domestic black market. However, as the economy recovers, we expect the burgeoning middle-class with higher disposable incomes to stimulate growth across the retail sector.
The Venezuelan consumer offers only minimal opportunities for retailers in the short term, though we take a more positive view over the medium term, towards the end of the decade, as inflation is stemmed, and real wages improve, in conjunction with underlying fundamentals such as rising urbanisation, positive demographic profiles and strong consumer appetite for foreign retail brands and imported items.
When looking at income growth, the rapid inflation over the past year has resulted in a deceptively large increase in average net income. However, real wages are falling, and unemployment has spiked, resulting in lower spending power and a significant...
The Venezuela 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 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 (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.