Non-Grocery Specialists in Ecuador

PROSPECTS

Electronics and appliance specialist retailers see strongest recovery

Electronics and appliances were some of the most affected products in 2016 and even in 2017, following additional import tax charges. However, the trade agreement with the EU and expected recovery in consumer confidence is expected to boost retail sales of electronics and appliances, along with the participation of domestic producers offering such products at good quality levels and lower prices.

Domestic production underpins recovery by specialist retailers

Local manufacturers supported by government programmes or developing alternative modern methods of organisation have enhanced domestic production in categories such as apparel and footwear, health and beauty products, home improvement and gardening and also electronic products, allowing reduced costs and prices as well as creating a more efficient value chain, especially in terms of supply and distribution. Strong domestic production clusters are found in areas such as Atuntaqui, as multinational companies such as Inditex, owner of brands such as Zara, Bershka, Pull & Bear, etc, benefit from these activities by bringing sales to the final consumer.

Trends in non-grocery specialists impacted by structural factors

Specialist retailers dedicated to non-grocery lines of products are more affected by exogenous factors such as illegal trade, contraband and also fluctuations in industries such as construction, land property costs, or global economic issues. Many specialist retailers also note that movements in structural factors also affect trends in retailing in a particular way, as main providers and end-consumers are deeply impacted by the commercial environment and also international trade activity, where events in supplying countries can have a considerable influence on domestic retail.

COMPETITIVE LANDSCAPE

Illegal commerce and weak border controls are threats to specialist retailers

Specialist retailers in Ecuador have suffered from unfair competition from widespread illegal commerce in categories such as apparel and footwear, sports goods, jewellery and watches. Sometimes even pharmacies or other specialist goods retailers have to compete with legal businesses that sell illegal goods with no specific regulations.

Exit of international companies slowed during overview period

The state of Ecuador’s domestic economy together with factors such as higher prices and increased taxes made it difficult for international brands such as Diesel, New Project, Kipling or even domestic brands such as Vélez Cueros to continue operations in the country. Many decided to stop domestic operations in 2015 and 2016, however, this trend almost came to a halt in 2017 with just a few departures/closures by companies, mainly those of a smaller size and too niche a product segment.

Drugstores/Parapharmacies the most intensely competitive category

The competitive environment for drugstores/parapharmacies is perhaps the widest and most competitive of all non-grocery specialist retailers, as the majority of outlets belong to chained operations. Farcomed (Fybeca, Sana Sana brands), Difare (Pharmacys, Cruz Azul brands) and Quifatex are the main competitors in the channel but there are also other groups such as Farmaenlace and Génesis with a more local/regional focus, that are also strong competitors.

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