Bringing Value in the Retail Sector, Investing in Progress
IFC supports investments in the retail sector in developing countries because of its economic importance in terms of employment, consumer spending, and tax revenues. In fiscal year 2013, IFC committed more than US$600 million of long term and short term financing in the retail sector.
The global retail industry employs more than 150 million people and accounts for about 9 percent of global GDP—and another 20 percent indirectly. As emerging markets attract modern retail, there are many possible benefits, including increased productivity, economic growth, capital investment, job creation and exports.
IFC retail projects vary in type, size, and country, but they share one core component: a role in cultivating local supply chains. For our clients, local supply chains mitigate foreign currency exchange risk and can greatly reduce the cost of goods, improving the bottom-line profit that is critical for a sector typified by slim margins. A competitive, reliable local supply chain can help maintain price points so that retailers can differentiate themselves as more players enter the market.
The local economy as a whole benefits with the development of new and related industries such as, agribusiness, food processing, light manufacturing, warehousing, and distribution. IFC’s retail clients create jobs, contribute to the tax base, build local banking capacity, improve infrastructure, and raise labor standards. A virtuous cycle develops as these economic benefits create wealth and disposable income, resulting in more spending on retail goods.
IFC also encourages retail companies to adopt green building-friendly policies. We look for common ground between the client’s business interests and the common good in areas including improvements in water and energy efficiency, enhanced sewage treatment, and waste disposal.
Since 1956, IFC has invested over US$2 billion inover 75 retail projects in more than 30 countries. IFC has committed portfolio in retail of US$1.2 billion consisting of 48 projects with 35 clients in over 30 countries, as of 06/20/2013.
Development Impact of Retail Investments
Development of commercial infrastructure
Improved access to better qualify products and services
Transfer of modern warehousing/retail techniques
Multiplier effect along the supply chain
Expertise across Subsectors
IFC’s sector expertise, regional knowledge, and leadership in sustainability offer significant value to clients, in addition to the full suite of financial products we offer. Our retail projects in several broad subsectors include the full range of retailing, shopping malls, entertainment, and distribution (warehousing and logistics).
Within the retail sector, IFC has financed supermarket and hypermarket chains, apparel distributors, specialty shops, coffee shops, do-it-yourself stores, and electronics stores. IFC is encouraging new and experienced players to invest in projects that blend profit potential with job creation and environmental stewardship, a combination that can benefit companies, local consumers, and the country as a whole.