Brazilian retailer Grupo Pão de Açúcar (GPA) posted slightly higher sales growth in the first quarter than rival Carrefour Brasil, despite the negative impact of food deflation in the market.
Total gross revenue at GPA was up 7.6% in the first quarter of 2018, to R$12.3 billion (€2.93 billion), while Carrefour Brasil posted 6% growth in the same period.
The difference between the two operators is more pronounced in the atacarejo (cash-and-carry wholesale) store format, where GPA’s Assaí banner saw 10.7% sales growth, compared to 1.4% for Carrefour's Atacadão.
GPA Performance
On a same-store basis, gross sales growth at GPA was 4.8% (+2.8%, excluding calendar effects).
In the wholesale segment, Assaí saw a 25.0% growth in gross sales, to R$5.5 billion (€1.31 billion), driven by 20 store openings and like-for-like growth of over 9%.
Some 17 Extra stores have been converted into Assaí outlets, while a new Assaí store was opened in Itabaiana (Sergipe). Four new stores are under construction, and one is undergoing conversion.
In its retail segment, which includes the Pão de Açúcar and Extra brands, GPA's gross sales fell by 3.3%, to R$6.80 billion (€1.62 billion). The result was impacted by food deflation and the closure of a number of Extra Hiper stores, which were converted into Assaí outlets. Like-for-like sales were up 0.7%.
Elsewhere, a fire at a refrigerated distribution centre in December, which supplied 496 stores, resulted in a drop of sales of around R$200 million in January and February. However, like-for-like sales rebounded in March, rising by 11.8%.
Factors that impacted the March sales uplift included adjustments in commercial strategy, including more promotions, increasing investment in loyalty programmes and the normalisation of store supply.
E-commerce saw a double-digit increase in Q1, with the implementation of the Delivery Express service in about 50 stores. GPA ended the quarter with 1,072 food stores, compared to 1,081 at the end of 2017.
Carrefour Leads The Way
According to the 41st edition of the Super/Hiper ranking, published by the Brazilian Supermarket Association (Abras), Carrefour Brasil was the biggest grocer in the country as of the end of 2017, with a turnover of R$49.6 billion (€11.8 billion).
The ranking placed GPA as the second-largest retailer in terms of sales, with R$48.4 billion (€11.5 billion) worth of sales, followed by Walmart Brasil, with R$28.1 billion (€6.7 billion).
There was no change among the top five retailers compared to 2016, while the turnover of the 20 biggest companies in the sector amounted to R$187.4 billion (€44.6 billion), up 3.8% year on year.
Overall, the Brazilian grocery retail sector was worth R$355.2 billion (€84.5 billion), with an annual growth of 4.3%. It ended 2017 with 89,300 stores and 1.82 million employees.
Tactical Moves
The two market leaders have been increasing investments in new digital customer relationship tools to boost market share.
Earlier this year, GPA relaunched its Pão de Açúcar Mais loyalty programme, eliminating a points system and introducing discounts and rewards for customers who reach their purchasing goals. The dedicated app, which already has over five million downloads, also enables online purchases and express checkout services.
Elsewhere, since its launch in October, the Meu Carrefour app has close to 6.6 million customers, a 95% increase since launch, with over 900,000 downloads. The app focuses on providing customised offers for customers, as well as discount coupons, online sales, and a store locator.
Carrefour Brasil is also targeting growth through a new supermarket banner, with plans to open ten Market stores in 2018.
Two have already opened in São Paulo, focusing on fresh products, such as fruits and vegetables, meat and bakery products. The stores will have an average size of 500 square metres, offering 7,000 products, including a wide range of fresh products.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Branislav Pekic. Click subscribe to sign up to ESM: European Supermarket Magazine.
