Latin America: key retail developments in Q4

Date : 19 January 2016

In this update, we look at what happened at retailers across the region in the fourth quarter of 2015, including expansion, refocusing, and quarterly results.

Expansion to continue in 2016

  • Soriana and La Comer agreed to the conditions imposed upon them by the competition authorities in Mexico, in relation to the acquisition of La Comer stores
  • Falabella announced its 2016-19 investment plan which will see it expand across all six of its Latin American markets
  • Casa Ley opened its 60th store in the northern Mexican state of Sonora in December, its 214th overall. It will open six stores in the state in 2016 
  • In Colombia, Ara opened a second distribution centre and entered the Caribbean Coast region. It opened 56 new stores across the year as a whole
  • Mexico's Chedraui plans to open 17 stores in 2016, the majority of which will be Super Chedraui
  • Brazilian retailer Grupo Zaffari announced a return to expansion. It plans to open stores in its heartland of Rio Grande do Sul, and an additional store in São Paulo, in 2016

Strong results for some, while currency impacts are a major factor

  • Latin America continues to be a highlight for Carrefour. Fourth quarter results revealed overall organic growth of +15.9% despite currency impacts. On our most recent visit to Brazil, both Carrefour's Atacadão and Express stores stood out as impressive formats with significant growth aspirations. Carrefour plans to accelerate the expansion of its convenience store format in 2016
  • GPA reported a 0.2% increase in net sales for its Consolidated business in the fourth quarter of 2015, with a 6.7% rise for its Food businesses. Consumers are now seeking more entry price or promotional products and this affected the performance of food categories
  • In Q4 Latin American wholesaler PriceSmart reported a 13% increase in warehouse sales. It ended the quarter with 37 clubs
  • In Q3, DIA again revealed growth in Latin America, but depreciation for the Brazilian real saw Argentina overtake its larger neighbour as DIA's leading emerging market  
  • Walmex delivered what it called a strong third quarter, with net sales up nearly 8% at constant currency. Competitive and economic challenges affected Walmart's performance in Brazil in Q3
  • In Q3, Oxxo added almost 300 stores, La Comer reported a 0.6% increase in sales, while Soriana and Chedraui's sales were up by 9.4% and 12.2% respectively
  • Increased sales area from new store openings, and same store sales growth at Tottus, boosted Falabella's third quarter 
  • Chilean retailer SMU reported revenue growth of 6.8% year-on-year for Q3, indicating the effectiveness of its three-year plan
  • Following Casino's restructuring and consolidation of its Latin American operations in July, in Q3 Grupo Éxito reported dramatic sales growth of over 200%. This however is subject to adjustments as consolidation progresses 

Restructuring and refocusing on core operations

  • In January, Walmart announced the closure of 115 stores in Brazil and other Latin American markets as it seeks to refocus on core formats. The closures are on a global scale, including in the US. In addition, Walmex is seeking third-party offers for its apparel business Suburbia, as part of the same optimisation initiative
  • Walmex appointed a new CEO in January: Guilherme Loureiro. His former role, heading operations in Brazil, is taken by Flávio Cotini
  • Cencosud could launch the IPO for its shopping centre division as early as mid-2016, as it looks to reduce debt and increase profits. It is also divesting some in-store pharmacies in Colombia

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Catherine Ellwood is an analyst at IGD. Her responsibilities include research into Latin American FMCG markets and retailers.
@IGDLatinAmerica