Why Carrefour is evolving its supermarket strategy in Brazil

Oliver Butterworth
Retail Analyst
@RetailAnalysis

Date : 05 November 2019

Many shoppers in Brazil have migrated their weekly/bi-weekly food shops from hypermarkets and supermarkets to atacarejo (cash and carry). This has affected the way that customers shop in other formats, with many now using supermarkets for top-up and replenishment shops.

This article focuses on how Carrefour is evolving its supermarket strategy to stay relevant in the market and to complement its own Assaí cash and carry banner.

Carrefour sees gap in the market for new mini-supermarket…

Carrefour has a relatively low supermarket presence in Brazil, compared to the likes of GPA and Cencosud. Until December 2017 it had just 41 stores under its Carrefour Bairro supermarket banner. For now, it has no intention to redevelop those stores, however it sees a gap in the market for a new supermarket banner, which could work in tandem with its successful Assaí banner.

…so launches Carrefour Market banner in São Paulo

Carrefour launched its Market concept in December 2017 and opened 10 stores under the banner by the end of 2018. For now, these are all located in the state of São Paulo, but we see the potential for these stores being successful in other metropolitan cities. 

Carrefour Market, São Paulo
Source: IGD Retail Analysis

The stores are between 400 and 500 sq. m and stock about 7,000 SKU’s. They are predominantly located in out-of-town, high-income residential areas and fulfil the role of the neighbourhood proximity store. This is ideal for urban customers seeking convenience and looking to perform top up or two-to-three-day shops. Carrefour’s mission statement for this format is “solve your life near you”.

How does Carrefour differentiate the offer at these stores?

Given their size, the stores feature an impressive range of fresh produce. Carrefour’s Assaí banner sells an adequate range of fruit and vegetables, however, the Market banner differentiates by selling both the core items, for missing-item/top up purchases, but also more exotic items that can’t be found at Assaí.

Most of the fresh produce is loose, allowing customers to feel the freshness. This appeals to individual customers and smaller families, who can buy the exact quantities they need.

Source: IGD Retail Analysis

Some stores feature a fresh meat counter, with a visible preparation area. Again, this is perhaps not what you would expect from a store of this size, but its inclusion helps to showcase the stores’ quality and fresh credentials. It also provides a convenient option to buy meat without visiting a larger hypermarket, traditional street market or butchers. 

Source: IGD Retail Analysis

Greater focus on organic and private label…

Carrefour aims to double the sales of its organic products in stores by 2020. The business forecasts that sales of organic products will reach BRL$500m (US$125m) by 2022, which will equate to 20% of its total sales. To support this, Carrefour Market stores contain a wide range of organic products, including a high penetration of Carrefour’s organic private label.

 

Source: IGD Retail Analysis

 

Organic products are thought to be roughly 25% more expensive than regular foods in Brazil. Carrefour is looking to reduce this to 15% by working with local suppliers and adding more affordable products to its organic private label range. Due to the Market stores’ affluent locations, customers are likely to have more disposable income, which provides Carrefour with a good opportunity to demonstrate the quality of its private label and organic products.

…as well as health-food categories

Carrefour Market has conveniently grouped together its health-focused ambient categories into one aisle and clearly merchandised this under its global Act for Food campaign. This helps the stores to further differentiate from Assaí, which has a minimal health-food category, and encourages customers to shop across both banners.

Source: IGD Retail Analysis

Continued store expansion

In 2019 Carrefour aims to open between 10 and 30 stores across its two proximity formats; Carrefour Market and its Carrefour Express convenience banner. At this stage it is unclear whether Carrefour will quicken the pace of openings in the banner or extend the model outside of São Paulo. However, we can see the potential for the banner being successful in affluent neighbourhoods close to Brazil’s other major cities.  

This article follows on from recent articles we have wrote on ‘Why Brazil’s biggest retailers are evolving their supermarket propositions’ (which can be found here) and ‘Why GPA is evolving its supermarket proposition in Brazil’ (which can be found here).

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This report covers six examples of Brazil-based retailers celebrating their fresh ranges. This covers a mix of store formats located in Rio de Janeiro and São Paulo.

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