Boston, MA -- (ReleaseWire) -- 03/07/2014 -- Brazil's retail sector will continue its strong growth trajectory, boosted by an increasingly affluent population, rising urbanisation and a decrease in unemployment. The number of households entering the US$10,000+ income bracket will reach 72% by 2018, driving growth in non-essential items/ experiences, such as clothing, personal care and dining out. Lower income households are also being targeted by budget store formats, particularly in the MGR sector, and we expect this trend to continue.
The 2014 FIFA World Cup and the 2016 Olympics are set to promote investment into sectors that traditionally benefit from major sporting events - including beer, soft drinks and retail - with these events representing an opportunity for Brazil to shine as both an investment and tourist destination. Tourism offers a huge opportunity for the retail sector over the next few years, one which the retail groups are keen to capitalise on. In addition to this, Brazil's online retailers expect a massive sales boost in 2014, owing to the World Cup, according to industry research agencies E-bit and ABComm (BNamericas).
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Sporting events aside, the country's retail sector is set to experience positive long-term growth, spurred by an increasingly wealthy workforce, which has the purchasing power to buy more (often pricier) goods. Rising consumer wealth has increased domestic spending, with retailers eager to cash in on this attractive market. International retailers, in particular, are looking Brazil's way; H&M is reportedly considering opening its first store in Brazil, following the successful opening of its first Latin American store in Chile in March 2013. November 2013 reports suggest Brazil's first H&M store could be at the Paulista Avenue, in Sao Paulo. GAP had been planning its entry into the Brazilian market for years, before opening its first store in September 2013 in Sao Paulo. TopShop entered the market in 2012, and is planning rapid expansion, with Forever 21 and Sears also implementing market strategies.
However, some areas of the sector, such as food & non-alcoholic drinks spending will see less spectacular growth, as it is a fairly mature market. Instead, households will be directing more money towards education and communication, which will see the greatest year-on-year increases.
Key BMI forecasts:
- We are forecasting the number of households to grow by an average of 0.9% y-o-y between 2014 and 2018.
- We are forecasting net per capita income to increase from US$6,903 in 2014 to almost US$10,000 by 2018.
- We are forecasting the number of households in the US$10,000+ wage bracket to make up 72% of the total population by 2018.
- Unemployment is to decrease by an average of 2.2% per annum.
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