Latin America: key retail developments in Q2

Date : 28 July 2016

In this update, we look at what happened at retailers across the region in the second quarter of 2016, including results, format development, and new market entries.

Mixed bag of results to date

  • In Brazil, there seems to be no stopping Assaí as the atacarejo format reported 37.6% sales growth year-on-year for Q2. Proximity growth was also double digit for GPA
  • Casino's e-commerce business, Cnova, saw a 6.6% fall in net sales for Q1 (at constant currency), while in the second quarter, growth in France offset the challenges in Brazil. It is closing the Cdiscount operation in Colombia in July 2016
  • Walmex revealed a 13.2% increase in net sales for Q1, followed up by an 11.5% increase in Q2. Same store sales growth drove the improvement in total Walmex sales for Q2, however the retailer is seeking to develop a stronger contribution from new stores and e-commerce
  • Walmart reported comp sales up 4.5% in Q1 in Brazil, and +8.6% in Mexico  
  • Cencosud said it had a resilient first quarter, with revenue and same store sales growth across the region with the exception of Brazil
  • Grupo Éxito reported a solid first quarter, and is implementing best practice across its Latin American markets, for example introducing Argentina's commercial model 'compra del mes' (the purchase of the month) into Brazil as '1, 2, 3 passos da economia' (1,2,3 steps to saving). In Q2, Grupo Éxito said it saw growth accelerate after a good performance in Colombia, Uruguay and Argentina
  • FEMSA Comercio's retail division grew revenue by 12.6% in Q2. There are now 14,461 Oxxo stores
  • RaiaDrogasil reported gross revenue growth of 26.3% in Q1, and has entered into a partnership with cosmetics company Natura to sell the latter's products 
  • Jerónimo Martins' ara reached sales of EUR101.5m in the first six months of the year. It opened, in line with the plan, nine stores while preparing to enter its third operating region. Ara will open, in H2, its third distribution centre (Bogotá)

Format development and acquisitions

  • Grupo Éxito opened its first cash and carry store in Colombia (Surtimayorista), aimed at business customers, having taken learnings from the success of Assaí in Brazil
  • Oxxo's parent company, FEMSA Comercio, is acquiring Chilean convenience chain Big John, gaining a foothold in the market and basis from which to build
  • Soriana is seeking locations for its new Híper Miyana hypermarket concept, the first of which opened in early June in Mexico City, targeting more affluent consumers
  • In Brazil, Carrefour reopened a store in Belo Horizonte, Minas Gerais, under the 'new generation' concept
  • Brazilian retailer Super Muffato opened its first gourmet store in Londrina, Paraná. Its third overall under this concept, this highlights the potential to provide a more premium offering in Brazil despite economic challenges
  • Zaffari has opened its second store in São Paulo, in the area of Morumbi

Market entry, expansion and online

  • Discounter DIA is to enter Paraguay, having reached an agreement with a leading FMCG local partner
  • SMU decided not to divest Mayorsa and MaxiAhorro in Peru, following improved performance
  • Sandwich chain Subway plans to open 100 stores per year in Mexico, building on the success of the 1,000+ outlets already open (more on our food-to-go research here)
  • Cencosud and Chedraui entered into alliances to sell their products via online delivery platform Mercadoni, in parts of Colombia and Mexico respectively

Keep up with our Latin America analysis

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