Three trends that will shape grocery retail in Latin America in 2021

Date : 05 February 2021

Oliver Butterworth

Retail Analyst

In 2020, the Covid-19 pandemic impacted the food and consumer goods industry in a way that no one could have foreseen at the start of the year. Shopping habits changed at rapid pace and the retailers had to adapt to meet their changing needs.

Although it is unclear exactly what the next 12 months will bring, the actions of the region’s leading retailers in 2020 help to us to understand the direction they are moving.

Outlined in our report, Latin America Retail Outlook 2021, we highlight five new trends that are set to shape the Latin American market and influence retail strategy in 2021 and beyond. Here we explore three of those trends.

1. Acceleration of omnichannel strategies

Enhancing the omnichannel experience is a key strategic focus for major retailers in the region. They aim to give customers greater flexibility over how and when they place and collect online orders, which has become more desirable during the pandemic.

Omnichannel will continue to influence new store designs, which will lead to heavy investment in 2021. We are seeing retailers remodelling stores to accommodate omnichannel initiatives and in the last six months we have even started to see the launch of new banners. We will continue to see the rapid roll out of drive thru collection services, click and collect counters, lockers etc.


Source: Walmart Mexico

As many customers migrate their spend online, larger store formats will increasingly be used as brand-hubs where retailers showcase their latest and greatest products (particularly non-food). Customers can conveniently order these items in-store (at dedicated ecommerce counters) or online.


Source: Grupo Éxito

2. Discount goes digital

The greater demand for ecommerce and home delivery, brought about by the conditions of the pandemic, led the Latin American discounters to rapidly accelerate their digital transformations. 

In 2020, most launched new websites and apps, which they will continue to strengthen. In order to quickly pivot and offer delivery, they are formed alliances with last mile delivery businesses, which was low-cost and fast to implement. To support the influx of home deliveries, some have already started to open dark stores, which shorten the last mile and reduces cost-to-serve. 


Source: Ara


Source: Facebook, Tiendas D1

In addition to launching new websites, many of the discounters joined social media platforms and these will continue to be used to showcase the latest in-store and online promotions. We have seen a significant shift from mostly paper/magazine marketing to digital. The retailers will continue to leverage multiple touchpoints to communicate new products and latest offers. As a result, we will also see the rise of more creative marketing campaigns.

3. Quicker, simpler shopping

Prior to the pandemic, speed of shop was already a key driver of store choice for many customers, particularly those living in busier cities. The pandemic fundamentally changed shopping behaviour in 2021 and when visiting stores, customers wanted to get in and out of the store quickly with a limited number of interactions with staff. Therefore, simplifying the customer journey and saving them time in-store will remain a priority.

Technology will play a key role here, as retailers continue to roll out self-checkouts (not yet commonplace in the region), as well as more innovative payment solutions such as scan & go and payment by facial ID.


Source: Grupo Éxito


Source: Retail Analysis (in a GPA store)

We will continue to see artificial intelligence being used to simplify navigation and the path to products (e.g., smart shopping carts). The retailers are also re-designing their store layouts, to make it easier for customers to shop a broader range of shopping missions.

Retail Analysis subscribers...

For more insight, IGD Retail Analysis subscribers can access our in-depth report ‘Latin America retail outlook 2021’. This report provides greater depth on each of these trends, along with two other and over 20 case studies.

 

We highlight five trends set to shape the food and consumer goods retail market across Latin America in 2021.

The discount channel is evolving at pace in Latin America and this has sped up since the start of the Covid-19 pandemic. In this report we look at each of the major discounters and highlight their latest developments. We explore five themes for how the channel is evolving and provide some hypotheses for how the channel could evolve further in the next five to 10 years. We also consider the opportunities and challenges for suppliers and manufacturers.

See the latest industry news on Latin America.