Last week, we looked at the retail formats that are opening the most stores in North America, a developed market where discount and proximity formats are the fastest growing. This week, we look south to Latin America, a region which is developing quickly.
Five of the top eight (and eight of the top eleven) banners in forecasted store openings are convenience and drug store operators. In fact, convenience and drug stores count for an astounding 58% of store openings over the next 5 years in Latin America. With the rapid growth of urban areas in Latin America, proximity formats have become increasingly popular and important. 81% of Latin Americans will be living in an urban area by 2015, up from 78% in 2005.
Both Bodega Aurrera Express and Carrefour Express also fit this trend, except they are food formats. Bodega Aurrera Express is Walmart’s small box discount grocery format which has been very successful in Mexico, and Carrefour Express is Carrefour’s proximity grocery store for which it has outlined an aggressive expansion plan. Lastly, the growth of Magazine Luiza is due mainly to its recent acquisitions of Baú da Felicidade and Lojas Maia. The company now accounts for 16% of chain consumer electronics sales in Brazil, still far behind market leader GPA (with their Ponto Frio & Casas Bahia acquisitions).
The small-box trend holds true when looking at the fastest growing store formats, but some new winning formats emerge. Discounters (Discount Grocery, Ltd Asst Grocery) are expanding rapidly across Latin America as they are finding success attracting the growing group of “bridge” consumers—shoppers that typically shop at informal or traditional retail.
Cash & Carry continues its rapid growth in Brazil due to investments by leading players. Large scale retailers SHV Makro, GPA, Carrefour, and Walmart have done a good job balancing the needs of the end consumer with independent “mom & pop” shops. The stores are typically found on urban perimeters and are bolstered by the success of smaller independents and mom & pop retailers in Brazil. The format has been so successful for Carrefour that they have exported it to Colombia and Argentina with their Carrefour Maxi banner.
RNG subscribers can access recent presentations on the Latin American retail industry here. Next week we’ll look at the fastest growing store types in Europe.