29 March 2017
GPA invests to drive new Brazilian growth

GPA is to invest BRL1.1bn (around USD384m) in 2017. It will split the funds between the cash and carry business Assaí, and its grocery formats.

Growing focus on Assaí

GPA will put just over half the funding into its cash and carry outlets. This has been the growth engine over recent years - sales increased by 38.6% in 2016 and now account for over one-third of total food sales. GPA has already been converting hypermarkets to the format and we expect this to continue in 2017. It will also open 20-30 new Assaí outlets, focusing on less affluent cities in north-eastern Brazil.

Proximity formats could see investment

GPA did not say which grocery formats it would invest in, but we'd expect the focus to be broad. In spite of some recent improvements in trading, there's an opportunity for it to upgrade its hypermarkets, a channel overall however that continues to struggle, set against the ongoing stellar growth of atacarejo. 

An area of much current focus for key competitor Carrefour is proximity, with plans to significantly expand its small store Brazilian estate. We could therefore see some funds dedicated to expanding its proximity store portfolio, especially minuto Pão de Açúcar, the impressive premium banner. 

Related subjects: