Friday, May 08, 2015

Atacarejo is the fastest growing format in Brazil

The atacarejos were again the sector's growth. Considering the same shops, the format had real high of 3.2% in 2014, while supermarkets had performance aligned with the sector: 1.7%. And hyper advanced more modestly – close to 1%. "At least the hyper if stabilized, interrupting the fall they were registering", says Ari Kertesz, a partner at consulting firm McKinsey. According to the Executive, there are cities where the public still prefers the format, like São Paulo and Porto Alegre. For Peter Zonta, President of the Condor network, which continues investing in hyper in Curitiba and interior of Parana, consumers in the region values the variety offered, in addition to the Department stores, with their feeding area, which allow a walk with the family. "It's not for nothing that Sunday is the biggest sales day in the format," he says. According to the 44th Ranking of Supermarkets, the Condor has grown 8.7% real in 2014, operating 29 format stores – there are 39 units. Its hypermarkets have between 5,000 and 6,500 m2 of sales area, while those of the giants that compete directly with the company have about 10,000 m2. The compact hyper reduces the complexity of management and personnel costs. "There is no need, for example, several managers", ensures Zonta. The network primarily serves social classes BC. Other companies are also satisfied with the format. The Gaucho Cla. Zaffari and Master, for example, recorded in 2014 of 5.3% real high and 14.2% with its hypermarkets.
To Silvia Sonneveld, partner of BCG (The Boston Consulting Group), the galleries give greater relevance to hyper. However, we must ensure that the shops to be installed offer, in fact, extra benefits and complementary. I.e. should not explore threads that the hyper would have the competence to explore, but can meet demands for which the hyper wouldn't have success. Hyper-focused
With shops between 5,000 and 6,500 m2 and nice shops, support the network of elevated sales of 8.7% in real format in 2014
Network LIDL, in Eastern Europe, for example, has many branches a butcher shop outside the shop, composing the shopping arcade. Silvia explains that in this region, the specialized establishments are highly valued, which puts the stores of the network at a disadvantage in a direct competition. It is therefore preferable to have a retailer specializing in the Gallery, because just giving convenience to the consumer, as well as attract traffic to all stores, including the hyper. An example is the Canadian network Loblaw, which preferred to invest in manufacturing in their hyper and saw business flourish in such a way that ended up creating the network of clothing Joe Fresh today with trade points themselves.
The atacarejos, however, continue to be the star of the sector. And the growth has attracted increasingly regional networks, which see in the template a way to gain scale, increase revenue and better serve large portion of the population, especially in times of expense reduction. According to Kertesz, McKinsey, until a few years ago, local companies were growing well above the market. But with the stabilization of the supermarkets and the deceleration of the hyper, they began to migrate to the atacarejo investments. There are several examples in many regions of the country. The Acre to Rio Grande do Sul, passing by States as Pernambuco, Bahia and Mato Grosso. Among the companies that have prioritized the format, is ABC, of Minas Gerais, where are installed five & carry cash. In October 2014, the company also entered the market of São Paulo with the Mega Market flag. That's three atacarejos, each in the cities of Marília, Limeira and Rio Claro. For 2015, are provided for the opening of branches in Bauru, Campinas and a third is still under study. An eye on the consumer
The network of cash carry Mega market & of ABC Group, has in the end consumers of 60% to 70% of its sales. Mix was tailored to customer needs
The atacarejo Mega Market primarily serves the final consumer, accounts for 60% to 70% of sales. For this reason, the Group ABC opted to deploy some services, such as slicing meats and cold cuts. For Richard Fernandes Martins, General Director of the network, the negotiation with the suppliers and the profitability of the categories correspond to the major challenges of the format. "The day to day commercial is more nervous in cash & carry. In two to three days the product turns and starts a new round of negotiations, "he explains. The high sales volume, associated with low costs, makes the deal closing in blue. "But the gross margin was eight percentage points lower than that of supermarkets," he says.
The margin is one of the advantages of super model that has grown little in the last year. Another advantage is its flexibility, which allows reinventions according to consumer requirements. No wonder that 2014 was marked by strong focus on small shops of proximity, above all among the biggest companies in the country, which resulted in a good volume of sales. For example the stores of up to 400 m2 of retail chains, the movement in Brazilian reais last year was close to R $ 780 million, according to Euromonitor consulting analysis. But the model, according to Ari Kertesz, McKinsey, still has no significant impact on the sales of businesses. In fact, the participation of nearby shops only in turnover bundled three giants-Carrefour, GPA and Walmart – ($ 104.9 billion in 2014) would respond to only 0.7% of sales, according to calculations from SM. Raise this level means creating a large network of branches. The partner of McKinsey points out that the big global player in the segment of proximity is the Oxxo, the Femsa Group, which operates the format in Mexico and in Colombia. The network closed last year with 12,853 units that yielded a turnover of 109.6 billion Mexican pesos. The growth was 12% on the previous one. And its Ebitda rose 11.5%, corresponding to 11% of the revenue. To achieve these results, the opening pace has been intense. Last year, there were 1,132 new shops – average of 3 openings per day.
Due to the enormous scale required, this type of store is in the plans of a few regional networks. "Imagine how many units would be needed to arrive at a single recipe atacarejo" asks Kertesz. The same reasoning holds true for the question of profit margin. "If the company perform a job and raise in 1% the average price in a supermarket or hypermarket already ensures a profitability higher in value," says. Carrefour Express
With four stores, flag offers products that meet three times: immediate, day-to-day purchases and Aftermarkets
The model can be an alternative to master only important centres of consumption, like São Paulo or São Paulo, which also would allow a moderate cost and logistics structure low complexity. Another point, according to Silvia Sonneveld, BCG: "today, most units offers the same as traditional supermarkets. But in the future, they must offer more food and ready meals, "he adds. In fact, as Minute Pão de Açúcar and Carrefour Express are already experiencing. One thing is certain: all formats – super, hyper or atacarejo-are being wiped out by changes in consumer behavior and competition, the important thing is not to turn a blind eye to market signals.
High of 3.2% atacarejo
High of 1.7% supermarkets
High of 0.9% hypermarket
Real increases related to the same stores concept
Supermercado Moderno News Item translated automatically
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