Latin America: key retail developments in Q3

Date : 20 October 2015

In this update, we look at what's been happening at retailers across the region in the third quarter of 2015, including expansion, restructuring, loyalty scheme developments and in-store activity with suppliers.

Mixed results, with Brazil proving a tough market

  • Carrefour said its increasingly multi-format strategy in Brazil drives positive growth, with like-for-like sales up 7.4% in Q3. Like-for-like sales were up 27.1% in Argentina
  • Growth in its food division, which outperformed the sector, led to increased sales at GPA in Q3. Assaí is responding to consumers' need for value, but GPA's non-food segment is struggling
  • In Mexico, Soriana said the improving economy boosted its second quarter; total revenues were up 8.3%. La Comer was affected by the later timing of major promotions this year, while new stores boosted results for Oxxo and Chedraui
  • Brazil is a difficult market for Walmart, especially given the economic conditions. Both comparable store sales and net sales were down in Q2, and shoppers are more cautious. E-commerce is doing well however, with double digit sales growth outpacing the Brazilian e-commerce market. Walmart still plans to expand in Brazil despite the challenges, especially in the north-east
  • Falabella revealed 10% growth in consolidated revenues for Q2, with a strong performance from the supermarket business
  • Online sales are going from strength to strength at Costco Mexico, with a 97% increase for the September 2014 - August 2015 fiscal year, and an expectation of 60-67% next year 
  • Cencosud reduced the value of its assets in Brazil, as a result of deterioration in the market and macroeconomic conditions. It also reported falls in revenue and supermarket same store sales in Q2

Expansion and restructuring across markets

  • Casino announced a regrouping of its Latin American operations, centred around Colombian operation Éxito, which is fully consolidating all regional activities. Casino aims to make best use of each country's expertise, e.g. Brazil's in cash and carry, and roll that out in a targeted way
  • Mexican competition authority Cofece finally gave approval for Soriana's acquisition of La Comer stores. Cofece ruled the deal would significantly reduce competition in 27 markets and as such imposed certain conditions. Read more here
  • Jerónimo Martins plans to take Ara into a new region of Colombia in Q3, following growth in both store numbers and sales
  • Argentina and Brazil are generating good growth for DIA. Its price and proximity model is finding favour among shoppers, a positive perception that is likely to grow as the retailer expands. In Brazil DIA expects double digit growth in local currency and to have opened a net 132 new stores in 2015
  • GPA is testing a new, as yet unnamed, small store format. Located in suburban neighbourhoods, it will fill a gap between Minimercado Extra and Minuto Pão de Açúcar
  • Carrefour has been accelerating openings of its Express convenience format in Brazil. It opened 13 in the past year and has a three-year expansion plan in place, starting in Greater São Paulo
  • Carrefour has also opened its first standalone drugstore in Brazil, in São Paulo next to a new Express store. At 100 sq. m, it stocks 7,000 products
  • Paraná-based retailer Super Muffato opened its first store in São José do Rio Preto as it prepares to increase its presence in the state of São Paulo

Working with suppliers in-store

  • GPA is creating dedicated branded areas within its Pão de Açúcar supermarkets in São Paulo, beginning with mustard brand Maille, and Nutella. Its goal is to create new gastronomic experiences for its customers. It will extend the model to other São Paulo stores and to Rio de Janeiro this year
  • A similar initiative is underway in an Extra hypermarket in Itaim Bibi, São Paulo. Working with L'Oréal Brazil, Extra has created a premium 'beauty space' to bring together various national and international brands. Customers can test products and receive specialist advice

Increase in loyalty activity in Brazil

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