Retail Outlook in Latin America: Argentina

Nov 2, 2022 | Blog

Perspectives for the third economy in Latin America

In this  outlook series of Retail in Latin America, we provide a vision of the challenges and perspectives of the retail sector that changed so much during the pandemic, and that forces us to change priorities to take advantage of the new opportunities offered by the sector, and overcome the new challenges.

To do this, we address some of the most relevant aspects for retail in Latam or retail trade in Latin America, current status, potential, comparison with other countries in the region, which allow us to look at what they face as challenges and what possible opportunities retailers have. in each of the countries.

In this article we address Argentina, a country whose name means Silver.

Argentina General Data on one of Latin America’s most important economies 

It is estimated that in 2022, the Argentine population will exceed 45.9 million inhabitants, being the third most populous country in all of South America.

According to data from the World Bank, Buenos Aires is the most populous city in the South American country, with around 3.1 million inhabitants, since the entire metropolitan area that surrounds it has more than 15 million inhabitants, being one of the 20 largest metropolitan areas on the planet.

Argentina, one of the largest economies in Latin America, has a gross domestic product (GDP) of approximately $490 billion, according to World Bank data.

With abundant mineral resources in energy and agriculture, in the territory of 2.8 million square kilometers of the country, Argentina has extraordinarily fertile agricultural soils, has important gas and oil reserves, and is rich in renewable energy sources. It is an impressive country in food production, thanks to its large-scale industries in the agriculture and livestock sectors.

Likewise, the World Bank tells us, it has great opportunities in some manufacturing subsectors and in the innovative high-tech services sector.

The Organization for Economic Co-operation and Development (OECD), notes that “After a strong rebound in the second half of 2021, GDP is expected to increase by 3.6% in 2022 and 1.9% in 2023.

Also, a recent agreement with external creditors will reduce political uncertainty and help gradually reduce long-standing macroeconomic imbalances.

Annual inflation has risen to 58% and is largely related to domestic factors, as key domestic prices are decoupled from global developments.

Currency controls, low international reserves and limited fiscal space keep risks high, which will weigh on investment in 2022 and 2023, the OECD also notes.

Use of the Internet and Social Networks

By January 2022, Argentina had 38.02 million Internet users, 39.55 million social network users, as well as 56.28 million mobile device users, according to the We Are Social Agency report.

Data published on Meta advertising resources indicates that Facebook had 28.40 million users in Argentina at the beginning of 2022.

Updates to Google’s advertising resources indicate that YouTube had 31.70 million users in Argentina at the beginning of 2022.

Figures published in:

  • Meta advertising tools indicate that Instagram had 24.70 million users in Argentina at the beginning of 2022.
  • ByteDance advertising resources indicate that TikTok had 11.34 million users aged 18 or over in Argentina at the beginning of 2022.
  • LinkedIn’s advertising resources indicate that LinkedIn had 9.40 million “members” in Argentina at the beginning of 2022.
  • Twitter advertising resources indicate that Twitter had 5.90 million users in Argentina at the beginning of 2022.

(With information from We Are Social)

Fashion Industry in Argentina

According to Fashion Network, Argentina has done better in the fashion industry than in the last 3 years. “The Argentine clothing industry continues to step on the accelerator in relation to its exports and closes the first quarter of 2022 in positive numbers with double-digit growth in both volume and value analysis, according to the latest report from the Argentine Industrial Chamber. of Clothing (CIAI).”

The annual expenditure of Argentines on clothing and footwear is 28.9 Billion Argentine Pesos (around 185,244,528 Million US Dollars), according to data from Fashion United.

The Argentine E-Commerce

Argentine e-commerce exceeded $1 billion in annual turnover for the first time in 2021.

This after the boom of 2020 with the quarantine, when the sector consolidated growth in 2021, with revenues of $ 1.5 billion.

According to the Argentinian Chamber Electronic Commerce (CACE), Argentina’s e-commerce sales volume increased 68% during 2021. Total e-commerce sales in Argentina totaled more than $1.5 billion. This is the equivalent of 196 million purchase orders.

According to an analysis by Americas Market Intelligence (AMI), in 2021, the e-commerce market in Argentina reached 18 billion US dollars, which represented an increase of 42% compared to 2020.

According to the AMI analysis, “the e-commerce market in Argentina will grow by 50% in 2022 to reach US$26 billion.”

On the other hand, the e-commerce market in Argentina will grow at a compound annual rate (CAGR) of 32% between 2021 and 2025 to reach a total of US$53 billion in sales.

Retail Growth in Argentina

According to a Google study cited by Trade and Retail, 77% of consumers enjoy shopping both online and in physical stores. In this sense, physical stores will have to adapt to the new availability of online commerce, a sector that is expected to grow by 56% by 2025.

They note that “The best channel is the one that works for the consumer and by 2025, online and omnichannel experiences will be critical to business growth.”

According to the study, “physical stores will take on a new role as distribution centers and points of experience and sales, and will represent 67% of retail sales growth in Argentina by 2025. And 85% of total retail sales in the country.”

Retail Trends in Latin America

A KPMG study notes the following general trends for the region:

  • The new ecosystems and business environments 

One of the main secondary effects of a pandemic has been the collapse of the previously established consumption paradigm. The new purchasing model, including new business models and strategies for retail growth, has been instrumental in driving the industry’s value chain in a new and different direction.

  • The reconsideration of the costs of doing business

This new way of doing retail has posed great challenges for the sector, especially in an environment that was an element in which many elements of the costs of doing business before (for the most part, the payroll expenses and those related to the spatial locations needed to sell products) factored.

  • Purpose Driven Positioning 

The staggering number of consumers who gravitate toward brands and companies that lead their business based on a purpose or goal above them has only added more selection bias to these specific vendors. Sustainability, work ethic, fairness, inclusion in the community, diversity, human rights, animal protection, good governance and fair compensation are just some of those factors that attract consumers.

  • The power of the consumer

It can be said that the importance of the customer being part of the corporate objective cannot be overstated. Join actions whose pillars are well-being, respect or respect for diversity, among many others; the corporate goal can be reduced to putting the customer’s needs and preferences at the center.

What are the main retail trends in Argentina?

América Retail & Trade y Retail show some very interesting trends for Retail in Argentina.

  • Augmented reality: from the virtual to the tangible

Among other things, to show buyers what a product will look like when it actually reaches their hands.

  • Cryptocurrencies: new payment method

As it is a digital medium of exchange, its massive adoption in electronic commerce is a matter of time.

In the world there are already stores that accept these currencies as another option when making a payment; and in Argentina they begin to appear as a possibility for companies of all kinds.

  • Shoppable TV: new sales strategy

It is a functionality that allows you to buy live the products that are displayed on the screen. As they appear, they are accompanied by a QR code, so that the consumer can scan and buy the piece on the spot.

  • Direct to consumer: the end of the intermediaries

The D2C or “direct to consumer” mode is becoming more popular every day. Here it is the manufacturers who sell their products directly to customers, without third parties intervening in the process.

  • Omnichannel: customer’s preferences rule

A strategy through which brands are available to users through multiple platforms and channels, seeking to guarantee the greatest comfort and security in the purchase process.

A couple of omnichannel experiences are worth checking in Argentina: the Tortugas Open Mall, and Estudio Nube.

Ready to harness the Potential of Retail in Argentina?

Approach the experts in Retail technologies, to be part of the Argentine Retail potential.

Schedule an appointment with our representatives to go to your next level of retail.

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