While the retail outlook for Peru, Colombia and Mexico is for growth, it is very soft. In Chile, there might be some recovery. The Chilean groups, regional players, are regrouping and moving in and out of the highest-growth markets.
The major retail chains face a year of soft growth for their Latin American sales. At least that's the opinion of half a dozen analysts who watch the leading companies in the industry like Chiles Cencosud, Walmart's Mexican affiliate and Colombia's Grupo Exito, to mention three of the largest players in the region.
The experts think there could be some modest growth in Mexico, Peru and Colombia. Some add Chile to this group. And they all think retail activity will stall or decline in Brazil, Argentina and Venezuela.
Chile's retailers, like Cencosud, Falabella, Parque Arauco, Ripley and La Polar were the first to go regional once their local market was "saturated" or hit record sales. The Chilean companies are happy with the "pro-business" models of Peru and Colombia, where they found similarities to their domestic market, and therefore possibilities for market share. "They still have limited results, and they don't have the traction they have in Chile. The investments they've made still don't reflect the economic benefits," said Aldo Morales Echeverria, an investment analyst with BICE Inversiones.
Cencosud made the riskiest bet in Colombia, where it bought the operations of the French retailer Carrefour. "The local group Exito is very strong in supermarkets, but the main problem for Cencosud is another local company, Grupo Olimpica, based in Barranquilla, that's also growing very fast," said Morales. "Colombia faces lower crude oil prices. This has translated into lower consumption in the second half of the year," said Cristina Acle Kattan, an analyst with Banchile/Citi. "La Polar (a department store) was in Colombia and has left," added Morales.
For Peru, all those consulted expect higher sales. Parque Arauco bought two shopping centers there in January. "That operation will enable them to strengthen their operations in Peru, where business penetration in shopping centers is below that of Chile, and this provides an attractive outlook for growth," said Veronica Perez Lavin, a corporate and personal banking analyst with BCI.
"Chile and Mexico are better positioned to lead consumer spending in Latin America," said Francisco Maluenda Barrientos equity analyst at Grupo Bursatil Mexicano (GBM). "However, we must...