RetailAnalysis
19 January 2017
Why Brazil is looking bright for GPA and Carrefour

Following positive results from both retailers over the past week, we look at the drivers behind this growth.

1.Atacarejo entering all areas

The respective cash & carry formats, Assaí and Atacadão, have been critical drivers behind the strength of performance for GPA and Carrefour. While Carrefour didn't release precise figures, commenting only on the "double-digit" growth, GPA outlined how sales in its Assaí format had increased by 38.6% over the past 12 months, supported by a highly impressive like-for-like growth rate of 18.6%. While inflation remains a feature of the Brazilian market, it's well below these levels, pointing to substantial underlying uplifts at both a same store and a total level. 

The value focused, bulk-oriented format, which now accounts for over one-third of total food sales (BR$14.5bn out of BR$41.5bn in 2016), feels like it has scope to grow much further in 2017. Indeed, GPA spoke of the success of the stores converted from hypermarkets over the year. More of these will follow in 2017 alongside an ambitious new store opening plan which will add 20-30 stores to the 107 strong estate.  

Carrefour is already further developed with its atacarejo format, Atacadão, where store numbers - for now - eclipse those of Assaí, with c. 135 stores.  Expansion here, too, will continue, albeit at a more modest rate than Assaí, as Carrefour spreads its focus across its multiformat Brazilian store portfolio.

2. The growing popularity of proximity stores

One area where both have focused recently is on proximity. GPA has found its premium format, minuto Pão de Açúcar, has performed better than its more mass market miniMercado Extra, and will focus more on expanding the premium format in 2017. At Carrefour, expansion of its Express format has continued in São Paulo, where it now has c. 70 stores. The retailer will now be considering what scope exists for expansion into other parts of Brazil.

3. Supermarket reinvention

In particular for Carrefour, this has provided an important recent impetus to growth, as it has expanded its new look Carrefour Bairro format. Within these stores it's creating a different type of environment, with the goal of offering a "Carrefour Experience", enabling a more relaxed shopping environment. Enhanced in-store cafes are one important element of this, alongside improved displays, lighting and enhanced premium ranges.   

4. A greater focus on loyalty

For GPA in particular this has been a strong recent focus: it's been driving penetration of its loyalty card within the more premium Pão de Açúcar supermarket chain, while it's adopted a different technique in hypermarkets, where the goal has been to drive value perceptions and basket size through its 1,2,3 promotion, with bigger discounts offered on multiple purchases. This appears to be working: it's been rolled out in various forms by parent Grupo Éxito across its other Latin American markets.

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