In 2021 retailing in El Salvador rebounded. Stronger macroeconomic indicators such as positive GDP and low inflation as well as some return to pre-pandemic lifestyles boosted consumer demand.
As a consequence of the government’s imposition of mobility restrictions in a bid to curtail the spread of COVID-19, sales registered a contraction in 2020. However, by 2021 the market experienced a strong recovery, mainly due to a resumption in normal operations of mixed retailers, which was the worst affected channel by the consequences of the pandemic in the previous year.
Salvadorans prefer shopping locally with low-income consumers choosing traditional grocery retailers for all their needs while the high-income segment of the population chooses it only for the daily top-up. Salvadorans shop for groceries regularly, usually once a week, while non-grocery items tend to be purchased less frequently.
Close to 74% of the population live in urban areas. The urban population is concentrated in larger cities and towns close to neighbouring countries.
El Salvador has a reasonably well-developed road transportation network. While the quality and maintenance of road surfaces can vary considerably, especially outside of urban centres, it is generally easy for consumers to access local retail outlets via car or bus.
El Salvador has a large informal economy. It is estimated that two out of every three jobs in the country involve informal commercial activity of some kind.
The outlook for retailing in El Salvador is mixed. Total current value sales are expected to continue growing, but at a slightly slower rate than that recorded over review period.
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Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.See All of Our Definitions
This report originates from Passport, our Retailing research and analysis database.
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