[slideshow_deploy id=’1763′] Uruguay’s 2012 gross domestic product (GDP) is projected to rise to $50.3 billion at an annual growth rate of 4% and per-capita GDP is forecast to reach $14,800, according to the World Bank . Strong economic growth has translated into higher purchasing power, increased domestic demand, and dynamic retail sector activity. Despite its small local population, compared to it larger neighbors Brazil and Argentina, Uruguay’s high rate of urbanization and strong consumption levels are attractive to retailers. Uruguay retail sector activity has risen 30 percent a year since 2008.
Uruguay’s friendly investment environment, which includes tax concessions, has spurred retail development. Uruguay retail development activity picked up steam when the government opened the market for supermarkets and hypermarkets in 2009. Market pioneers such as supermercados Disco SA and Ta-Ta, SA moved quickly to control the supermarket business. Disco targets highly populated, low- and high-income areas of Montevideo, while Ta-Ta focuses in the country’s interior where it faces less competition. Smaller competitors include Supermercados Devoto Hnos SA, Tienda Inglesa and Multi Ahorro.
Having dominated the supermarket sector, Disco and Ta-Ta are now investing heavily in shopping centers i order to consolidate their retail sector control. In doing so, they are showing confidence in the future of Uruguay’s retail industry and are attracting other players to the market.Uruguay’s non-grocery retail market is shared by several small independent retailers such as Chic Parisien SA, who leads the clothing and footwear market with 4% market share and operates 25 stores (Parisien, Indian and DNK) and Coboe SA, who follows with 2% market share and operates 51 Farmashop stores covering Montevideo and some interior towns.
Uruguay’s limited scale and positive macroeconomic conditions make it an appealing choice for international retailers seeking controlled markets, in which they can exercise greater control and test concepts before entering other South American markets. Gap recently announced that it entered into an agreement with a subsidiary to enter Uruguay’s market. Pressure to enter the market remains low today since there has not been significant investment in retail real estate.
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