Latin America will remain the world’s fourth-largest region in terms of total retail sales in 2016, worth $1.920 trillion in 2016. However, it faces a number of challenges, including troubled economies in several countries, rising unemployment and high inflation—all of which are affecting the region’s retail health. Retail sales growth will accelerate over the next two years, but is expected to slow to 4.8% in 2020 due to decelerating economies in the region.
Despite economic uncertainties in the region, Latin America’s retail ecommerce market remains in a period of growth. Improving e-commerce infrastructure, such as developments in payment and shipping systems, and the growing number of ecommerce retailers in the region will help Latin America achieve an estimated $36.91 billion in retail ecommerce sales this year.
Retail m-commerce has grown considerably in Brazil, Mexico and Argentina. In the past year, their sales have risen between 41.0% and 62.1% in these countries, growing from a combined total of $2.69 billion in 2015 to $4.20 billion in 2016. Still, less than 20% of retail ecommerce sales in these countries will come from smartphones and tablets this year. eMarketer expects mobile’s share to increase over the coming years as more retailers invest in mobile sales platforms.
In Brazil, a sharp drop in commodity prices has hurt exports and recent political conflicts have led to added uncertainty. A weak economy has resulted in rising unemployment and declining wages, which are negatively affecting the country’s retail economy. For these reasons, eMarketer forecasts a 2.1% contraction in Brazil’s retail sales growth this year.
Brazil will remain the largest retail ecommerce market in the region. Sales will reach $15.60 billion in 2016, representing 42.3% of the regional total. But the ongoing economic crisis in the country will hamper future e-commerce growth. eMarketer expects total retail ecommerce sales in Latin America to reach $22.58 billion by 2020, but Brazil’s share of the total will slip to 30.2%. Though retail e-commerce sales will represent just 2.5% of Brazil’s total retail sales in 2016, its highly internet-connected population and level of mobile phone adoption will help ecommerce grow to 3.5% of the country’s total retail sales by 2020.
Mexico, the region’s second largest economy and retail market, will continue to see steady retail sales growth as merchants expand into rural neighborhoods. Mexico’s economy, which is closely tied to trade with the US, is seeing signs of modest acceleration. Coupled with healthy domestic demand, retail sales will rise 6.5% this year to $421.10 billion.
Mexico, the second largest retail ecommerce market in Latin America, will generate $6.06 billion in sales this year, equal to 1.4% of the country’s total retail market. Increased internet adoption and improvements in ecommerce purchase distribution and delivery will help drive retail e-commerce growth over the next few years, with sales expected to more than double by 2020 to $13.23 billion.
Although Argentina’s government lifted controls on currency restrictions in late 2015, inflation is expected to remain high there. Retail sales will rise 13.0% in 2016, mainly because inflation has driven up retail prices. However, as the country’s currency begins to stabilize, eMarketer expects retail sales growth in Argentina to come back to moderate levels by 2020.
In 2016, Argentina will post a 50.3% increase in retail ecommerce sales, the fastest growth in the region. While some of this expansion will be the result of high inflation, an increase in the frequency of purchases by digital buyers will also contribute to the surge. In addition, stronger than expected ecommerce gains according to local sources has led eMarketer to increase its growth expectations for Argentina for the entire forecast period.