03 March 2016
Grupo Éxito: a growth strategy for all seasons?

As Grupo Éxito releases its Q4 results and 2016 outlook, we look more closely at how it plans to grow amidst an often challenging Latin American economic backdrop.

1. Building synergies across markets

Grupo Éxito, ultimately part of Casino, became a stronger entity in 2015 as the Brazilian operations of GPA (also already part of Casino) were brought into the fold. While this makes the shorter term financials more confusing, it creates a stronger platform for longer term growth. And there are already benefits feeding through – through cost savings, joint savings and greater sharing of senior management capability across the operation.

Increasingly the business describes itself as "multilatina" to demonstrate its breadth of geographic focus, and now counts on over 2,500 stores as part of its store estate. Trading across three of Latin America's four most populous countries, it delivers genuine scale within this, particularly driven by strengthening the links between the retailer's key markets of Colombia and Brazil, but also increasingly as it looks to grow operations in Uruguay and Argentina.

2. Drive a differentiated format strategy

Across its key markets, Grupo Éxito continues to develop a multiformat, multichannel strategy within its food retail operations. What’s interesting is how it differentiates this by very distinct formats: for example in Colombia, where it operates Carulla (premium), Éxito (mainstream) alongside the SuperInter discount banner. These distinct banners help the retailer to better target specific customer groups with individual banners: significant in markets where there are large variations in affluence. A similar approach is already in place in Brazil, albeit with localised retail fascias that help show further relevance to local customers.

3. Get after the growth channels – value formats

In Brazil, the consumer goods retail growth story focuses primarily on the massively successful atacarejo format. And Grupo Éxito is superbly placed in this channel, with 95 Assaí stores across the country, 25% growth in 2015, and current store opening run rate of around 10 per year. In short, it's a growing force in a growing channel. And there's a huge opportunity to grow value-led formats elsewhere, most obviously in Colombia given its 2014 acquisition of the discount business SuperInter.

4. Get after the growth channels – convenience

Convenience and small formats are a big opportunity across Latin America and Grupo Éxito is leveraging its brand strengths to grow share. We are regularly impressed by the calibre of Minuto Pão de Açúcar stores in Brazil, and Carulla is adopting similar thinking with its premium convenience stores in Colombia. There are also moves afoot to expand in smaller formats in Uruguay through its more mainstream Devoto format, no doubt with learnings taken from the retailer's premium and mainstream convenience operations elsewhere.

5. All leading to a positive outlook ahead

Overall, the economic landscape will undoubtedly throw up economic challenges in the coming years, not least in Brazil, where the spectre of inflation also looms large. However, in Grupo Éxito we see a retailer that has the format strength and flexibility to grow in spite of these challenges, given a format flexibility that stretches across clearly defined value, mass market and premium propositions.

And while the non-food business has been through a challenging period, it remains a significant asset. This is both in its own right and in how it continues to inform the increasingly impressive non-food and food online operations that the broader business is developing, another platform for growth ahead.

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