In 2021 retailing in Sri Lanka returned to positive growth after two years of decline. The bombing of April 2019 and general uncertainty linked to the elections followed by the onset of the pandemic in 2020 and government measures imposed to control its spread created an unstable environment and a reduction in consumer confidence and spending power.
Sri Lanka’s retail sector accounts for around one-third of the country’s GDP. The sector also plays a vital role in the country’s employment, with nearly 14% of the employed population engaged in some form of retail activity in 2021, according to government statistics.
2019 was a challenging year in Sri Lanka as consumer confidence was struck after the terroristic attack and struggled to recover given the highly agitated presidential elections. As a consequence, retailing recorded a negative performance with retailers struggling both in urban and rural areas.
In 2019, the Sri Lankan economy continued to perform moderately well, despite the major bombing accident experienced over Easter and the presidential elections that caused considerable uncertainty. Retailing took a hit as consumers became extremely cautious and price sensitive in the months following the attack.
According to the Ministry of Transport and Civil Aviation, there are 756,00 cars, 1.1 million motor tricycles and 4.
Informal retailing remains strong in Sri Lanka, particularly for fresh produce and apparel. Wet markets, known in the Sinhalese language as Pola, are present in both urban and rural areas and are often the only available source of vegetables, fruit, meat and fish for rural consumers.
Retailing is set to see a strong performance in the forecast period. Sales are set to continue benefiting from strong economic growth once the pandemic recedes and vaccines are fully rolled out and the expansion of the crucial mid-income consumer group.
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Understand the latest market trends and future growth opportunities for the Retailing industry in Sri Lanka with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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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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