Walmart, Carrefour, Jeronimo Martins: targeting new Latin American growth

Date : 16 March 2017

We assess four initiatives announced in the past seven days to drive new growth across Brazil, Mexico, Central America and Colombia.

Walmart in Brazil: full speed ahead with large format reinvention

Following the success of initial trials, Walmart will invest BR$1bn (US$320m) in upgrading its large store estate over the next three years. It's a move that's needed, given the recent investments by others, like Carrefour, in refurbishing large store formats, as well as the continually expanding competitive threat from atacarejo cash & carry formats. Walmart will hope that the enhanced store environment, in areas such as fresh in particular, will sit alongside a value-oriented ambient groceries section. Its goal is to better compete against the attractive store environments of more premium super and hypermarkets as well as against the value-focused, bulk-driven format of atacarejo.

Walmex: investing for future growth

This week Walmex announced its own investment programme for 2017, with its MXN17bn (US$850m) investment a 19% increase from 2016. This is an investment that reinforces Walmart's commitment to Mexico and Central America against the backdrop of the Trump US presidency, and supports a broader 10 year goal of doubling the size of its business in the region. Though logistics are a strong feature of Walmex's broader development plan, in 2017 the bulk of investment will be in refurbishing existing stores (38%) and building new stores (31%). 

Jeronimo Martins joins the cash & carry set

It's hard to spend too long talking about grocery market growth opportunities in Latin America without talking about the cash & carry format. In markets like Brazil, Chile and Argentina, it's become a go-to format for consumers, as well as businesses. And we believe similar consumer drivers have supported the success of members' clubs like Sam's Club and Costco in Mexico, and PriceSmart across various Central American markets and, more recently Colombia. So with this in mind, it's very much on trend for Jeronimo Martins, which entered Colombia in 2013 with its discount/ neighbourhood concept ara, to be moving into this space in Colombia. This week it opened its first cash & carry, under the Bodega del Canasto banner, close to the Venezuelan border.  

Carrefour: getting closer to its customers in Brazil

Another important development this week came from Carrefour, which reinforced its commitment to expand in smaller formats in Brazil.  This move should add 70 new Express stores in 2017. The locations of these have yet to be confirmed, but we are keeping a close eye on whether it takes the format out of Greater São Paulo for the first time. This sits alongside a range of other measures designed to drive growth, including refurbishing its own supermarkets and hypermarkets, as well as accelerating the expansion of its atacarejo format, Atacadão.

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