Latin American retailers are projected to benefit from favourable macroeconomic conditions in 2024, driven by stable inflation and gradually declining interest rates, according to a recent Fitch Ratings report. This positive outlook comes amid increased competition from online-only retailers, which has pushed traditional retailers to enhance their market position by improving product offerings, elevating service levels, and enhancing the overall shopping experience.
In response to these competitive market dynamics, companies are adopting a more balanced strategy, focusing on both growth and profitability while executing digital initiatives. Retailers are showing increased caution with their capital expenditures (capex), prioritising investments that optimise logistics and strengthen long-term customer relationships, as per the LATAM Retail—Relative Credit Analysis report.
Entering 2024, retailers benefited from better inventory levels after reducing their purchases throughout 2023. Fitch believes that effective inventory management will continue to be crucial for maintaining profitability, even with these more efficient inventory levels.
Refinancing risks for these retailers are considered manageable, with local debt markets providing substantial support for refinancing efforts. However, international debt markets remain volatile due to disruptions in the global macroeconomic environment and ongoing geopolitical risks.
ALCHEMPro News Desk (DP)
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