With evidence of a cooling in luxury goods demand in Asia, together with softer spending by tourists in Europe and North America, there has never been a more promising time for the luxury goods industry to ramp up investment in Latin America. The region’s emerging middle class is highly aspirational and hungry for prestige brands, while the super rich are doing more of their shopping at home. Wealth is filtering from the capitals to small and mid-sized cities, bringing retail modernisation in it
The value of Latin America’s retail market has sky-rocketed over the past five years, spurred by a mushrooming middle class, wider access to consumer credit and a surge in retail modernisation.
Upscale shopping malls are springing up all over the region, creating opportunities for luxury retailers to develop new and broader footprints in capitals and second tier cities alike.
In the key markets of Brazil and Mexico, middle class wealth is spreading beyond traditional consumption hubs and bringing in its wake an appetite for prestige international brands.
There has been dramatic growth in social media, opening up new opportunities for luxury brands to engage with consumers. Brazilians and Mexicans are now among the biggest users of Facebook in the world.
Mexico, Brazil and Argentina fuel over 60% of retail spending in Latin America and are at the crux of the luxury goods opportunity. Mexico’s economy is growing fastest, and luxury goods expenditure could overtake Brazil by 2014.
Peru’s economy is one of the fastest growing in Latin America, and its luxury goods market is ripe for new investment. Chile, Colombia and Uruguay also present attractive niche opportunities.
Vibrant contraband activity impacts the development of luxury brands, though not always in a negative way. The biggest hub is the Paraguayan free zone of Ciudad Del Este, which feeds the Brazilian and Argentinean markets.
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