Argentine Consumer Life: Five Trends

Argentina

Argentina is an upper-middle-income nation with aspirations to join the ranks of high-income economies over the course of the next two decades. It has already recovered significantly from the 2001 government default and the subsequent economic collapse that plunged more than half of its people into poverty in 2002.

In the decade since, Argentina has demonstrated a steadily growing economy (averaging 8.5% real GDP growth per year from 2003 through 2008); weathered a one-year slowdown brought on by the global economic crisis in 2009; and quickly resumed its course of economic growth.

Within this context, Argentine consumers have securely regained their footing. In virtually every sector of the economy, salary increases have been keeping pace with the country’s high inflation, allowing consumer confidence to rise despite inflationary pressures. At the same time, significant hikes in social spending—which has risen from 10.3% of Argentina’s GDP in 2002 to 14.2% in 2010—have helped control unemployment and kept cash flowing through the economy.

3 KEY FINDINGS

  • More Argentines are gaining access to the Internet, and social networking is especially popular.
  • Mobile phones are ubiquitous in Argentina—and sales of 3G phones are rising rapidly.
  • Argentine consumers are increasingly health conscious, value convenience in their shopping behavior, and embrace green values.

3 TRENDS

INTERNET RISING: For much of the past two decades, Argentina has been slow to pick up the Internet, with penetration rates languishing around 30% for much of the first decade of this century. Yet this rate still makes Argentina second only to Brazil (which has a population five times as large) among the largest markets of Web users in South America.

RISING CONSUMER SPENDING: The Argentine economy has recovered relatively swiftly from the dark days of 2002, when the majority of its population fell into poverty in the wake of the government default on its debt. Since that time, poverty has fallen by roughly two-thirds and the country has dramatically reduced unemployment and income inequality.33 Economic output has grown at a brisk pace—and domestic consumption was responsible for nearly half (45.4%) of Argentina’s economic growth between 2002 and 2008.

RETAIL EXPANSION: Argentina already has one of the most modernized retail sectors among World 2 nations. The 1990s saw the rapid expansion of trade chains and supermarkets, many of them international. In the 2000s, significant investment in the retail sector continued. As a result, the retail landscape is already significantly diversified, with a mix of traditional markets, supermarkets and hypermarkets, convenience stores, neighborhood shopping centers, and high-end shopping malls. Nonetheless, Argentina’s retail sector is continuing to expand.

3 BUSINESS IMPLICATIONS

  • The government’s broadband initiative will quickly broaden the reach of the Internet and encourage the further development of e-commerce. Digital and mobile marketing will become increasingly important to reaching Argentine consumers.
  • With credit availability rising, and Argentine consumers becoming more comfortable with online banking, conditions appear ripe for a rapid expansion of e-commerce, and especially mobile commerce. Visits to retail websites will likely become increasingly transactional as well as informational—especially if these sites demonstrate that they can save Argentine consumers money.
  • The rapid proliferation of 3G mobile phones will open the floodgates both for content providers and for marketers eager to reach Argentines. Location-based discounts offered through mobile devices and/ or mobile TV commercials, for example, would effectively appeal to even the most affluent Argentine consumers’ penchant for value deals. The rise in smartphone use will also put more emphasis on reaching consumers through branded apps—rather than websites.