Newly released market study: Chile Retail Report Q3 2016

Chile has a highly developed retail market, with some segments already saturated, particularly in urban areas. The country has long been known for a stable and welcoming business environment, and thus a number of international retailers already operate in the market. As incomes rise and consumer spending increase s , particularly on aspirational items, we see increasing opportunities for retailers to target the growing luxury and niche retail markets. However, in the long term , opportunities will be limited by the small size of the country's population, at only around 18mn in 2016.

Full Report Details at
- http://www.fastmr.com/prod/1182731_chile_retail_report_q3_2016.aspx?afid=301

Key Views A nd Developments

Household retail spending is set to grow by 5.7% in 2016, before averaging 11.3% a year over the rest of our forecast period to 2020.

Food and non-alcoholic drinks will continue to account for a significant share of household retail spending, at 15.8% in 2016, falling to 15.6% by 2020. However, the 'personal, insurance and other' category will from 2016 be the largest in the Chilean spending portfolio, accounting for 16.2% in 2016, rising to 17.2% by 2020. Housing and utilities and transport are also significant spending categories.

Retail spending across the different segments is expected to grow strongly over our forecast period, but we see particularly strong growth in non-essentials segments, such as 'personal, insurance and other', recreation and culture and restaurants and hotels.

The proportion of households earning a net income USD10,000 or more a year will rise significantly, from 68.5% in 2016 to 88.4% by 2020. The proportion of households earning USD50,000 or over will more than double, from 3.2% in 2016 to 7.7% by 2020, hugely increasing the number of Chileans able to spend on luxury items.

We see the key retail demographic, those aged between 20 and 39, who typically have the highest disposable incomes and the most aspirational lifestyles, growing more slowly, with the average annual increase tailing off to 0.5% by 2020. Of more concern, younger age groups will decline in number over the forecast period, which will pose long-term challenges to Chile's retail sector.

We forecast that Chilean real GDP will grow by 2.1% in 2016, as low copper prices continue to affect the wider economy and limit government spending. However, increasing investment in infrastructure in the country, and a resilient jobs market, will support economic growth and we expect continued efforts to diversify the economy away from a dependence on copper. Through to 2022, we see gradually increasing growth, reaching 4.7% in that year.

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