Home Business Supermarkets: the rise and fall of a format that has marked the pace of mass consumption

Supermarkets: the rise and fall of a format that has marked the pace of mass consumption

Supermarkets: the rise and fall of a format that has marked the pace of mass consumption

Two recent figures represent the decline of self-service. In April, sales in that channel plummeted nearly 17% and accumulated a 8.2% setback for the year. Also, the format loses relevance compared to others, such as large chains and wholesalers. “From 2018 to today, 5% of the total have closed e have gone from 20% participation in mass consumption to 13%”, explains Javier González, from the Nielsen consulting firm.

An estimated 20,000 self-service shops survive in the country today, which mainly compete with supermarkets (4,000 branches), warehouses and neighborhood shops (140,000) and kiosks (125,000). “Self-service is the hardest-hit channel of all,” González points out. Yolanda Durán, head of the chamber representing the super Chinese, agrees in the industry “There is a lot of nervousness” for the expansion of local businesses promoted by large chains and some wholesalers.

Durán mainly alludes to shops Squeeze ANDmarket from Carrefour, most of the Dia supermarkets (70% of which are franchised) and the “Barrio” format of the wholesale company Diarco. These smaller branches of the chains they have key advantagesincluding the Fair Prices program, promotions in agreement with producers and banks, financing options and a wide range of payment methods.

“Next to us, on the same block, we have a hypermarket or a wholesaler. the competition is unfairDuran protests. Faced with a scenario aggravated by inflationary escalation and supply difficulties (“wholesalers charge cash”), the directive underlines that the method to survive is the conversion of the points of sale (“meals on the go, for example”) or migration to other more favorable areas“like border towns,” Durán lists.

In commercial jargon, large supermarket chains represent the “modern channel”. According to Nielsen, today they concentrate 35% of mass product sales (food, drinks, toiletries and cleaning) in front of the so-called “traditional canal”, which includes shops and kiosks, which reach 51%. The rise of the chains, in fact, has to do, among other things, with the expansion of convenience store formats.

Last March, the Spaniards Dia celebrated the thousandth opening in Argentina. In 2022, the chain increased sales by 5% and added 100 new stores. “We have gained market share for 6 consecutive quarters. Today we are first in the capital, with a stake of over 30% in the supermarket channel”, said the CEO of the company, Agustín Ibero some time ago. He also said they are second in the province of Buenos Aires (23%). In both districts, 85% of its shops are concentrated, which are between 200 and 300 m2.

The leader in the sector is the French Carrefour. It was the pioneer chain in venturing into local shops. In 2012 he finished closing the purchase of the Eki chain, compromised by debts, which At that time it had 129 supermarkets, almost all local. Today the company has a network of 620 branches, of which 400 of the Express format (the smallest) and 90 Market.

The most striking thing is the growth of Diarco in terms of final consumers. The wholesale chain is present in 17 provinces with a total of 91 branches. Of the total, they confirmed clarion company sources, 57 are wholesale shops (which divide their attention into supplying warehouses, shops, self-service and also to the final consumer) and 34 “Diarco District”the flag’s hallmark for its retail businesses.

Expansion of chains is just one obstacle for supermarkets. the other is the huge price difference between the channels, which has expanded mainly thanks to the Fair Prices program, which focuses exclusively on large chains. According to a survey by the Ministry of Commerce, the gap “was 46% on average” in early May.

For two years, self-service sales have not stopped decreasing, and they still haven’t found an apartment,” explains Nicolás Spinelli, General Manager of Scanntech Argentina. The senior executive says the segment faces several challenges, one of which is pricing. “Profitability in mass consumption depends on two variables: price and quantity,” he explains.

In this sense, he points out that since Fair Prices does not reach supermarkets, the priority is to maintain profit margins, while supermarkets can compensate (this lower margin) with sales volume. In any case, adds Spinelli shortages and lack of stock “in key categories” It is another factor that affects that channel.

To cushion the distortions and in the face of the collapse of sales in neighborhood businesses, the Ministry of Commerce is proceeding with the assembly of a new basket of about 120 products for local businesses. The office, led by mass supporter Matías Tombolini, is in talks with wholesalers and distributors to formalize the measure “in May”.

It is the third time that an attempt has been made to extend the “anti-inflationary” program (like the current Fair Price) outside the big chains. Paula Español (with Super Close) and Roberto Feletti (+ Careful Prices) had already tried unsuccessfully in 2021, both initiatives failing for the same reason: the lack of products.

Source: Clarin


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