THE RETAIL LANDSCAPE
IN LATIN AMERICA
HOW CHANNEL DYNAMICS AND ECONOMIC
CONDITIONS ARE AFFECTING THE REGION
Armando Uriegas
RMS and CPS Product Leader Head, Latin America
September 30, 2014
CURRENT CHALLENGE: FMCG CONSUMPTION
SLOWING DOWN
Nielsen basket Var vol%
RY MAM '13 vs YA2
High Inflation rate in LatAm
El Salvador
5.8
Nicaragua
6.2
4.8
11.6
1.2
Costa Rica
5.3
3.1
3
3.7
Chile
Brasil
-0.9
3.6
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
2.5
3.5 +3,9
2.1
Argentina
4.4
Honduras
0.8
Colombia
1.2
5.3
2.1
0.8
México
Venezuela
+4,3
10.9
Guatemala
As a result of high inflation rate periods
B.BRANDS (85%IP)
5.2
Panamá
Trading down movement
RY MAM '14 vs YA2
+2,2
2
-0.6
2
MORE THAN 40% OF HOUSEHOLDS IN LOW
SOCIOECONOMIC LEVEL
REGION
59.7MM
MEXICO
15.8MM
25
BRAZIL
37.0MM
35
42
61
34
37
44
33
% Val
9
% HH
% Val
High SEL
Distribution of Population and Value
Source: Nielsen Homescan
41
37
48
17
34
7
44
34
37
37
33
17
29
CHILE
2.3MM
48
43
41
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
24
PUERTO RICO
1.0MM
54
43
% HH
COLOMBIA
3.8MM
29
21
% HH
% Val
% HH
Medium SEL
51
34
% Val
15
19
% HH
% Val
11
15
% HH
% Val
Low SEL
*LatAm = Mexico+ Brazil+ Colombia+ Puerto Rico+ Chile
3
TYPICAL SHOPPER IN REGION BUYS FEW ITEMS PER
TRIP…
When shopping at a grocery store, what is the primary reason for the trip?
Latin America
19
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Europe
25
37
Middle East / Africa
19
Asia Pacific
18
21
32
Quick trip to replenish
10%
20%
30%
To buy a few essential items
Source: Nielsen Global Online Survey, Q1 2011
6
29
9
7
40%
50%
To purchase for meal today
60%
5
18
70%
To buy non-food item(s)
9
5 3
28
60
0%
4
25
33
North America
To stock up
32
6
7
5
4
6
4
6 2
41 7
80%
3
90%
To buy an advertised item
2
100%
Other
4
… DUE TO RETAIL DYNAMICS IN THE REGION
Despite number of stores, proximity channels make up less than 50% of sales
NUMBER OF STORES PER TYPE
519,371
470,697
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
2,894,185
2,919,028
2010
Self Service
Source: Nielsen Universe
2011
SALES % PER TYPE OF STORES
526,057
56%
55%
55%
44%
45%
45%
2010
2011
2012
2,962,024
2012
Proximity channel
Self Service
Proximity channel
5
MODERN VS. TRADITIONAL TRADE
Modern trade has higher sales, but shopping frequency is higher at traditional trade
LATIN AMERICANS PURCHASE 2.8 TIMES
MORE AT TRADITIONAL TRADE STORES
VS.
3.2
TIMES
MORE
2
46
98
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
54
MEXICO
61% SS
39% PC
3.7
3.6
TIMES
MORE
TIMES
MORE
COLOMBIA
43% SS
57% PC
BRAZIL
52% SS
48% PC
2.5
% STORES
SELF SERVICE
Source: Nielsen Universe
% VALUE
PROXIMITY CHANNEL
TIMES
MORE
CHILE
76% SS
24% PC
2.5
TIMES
MORE
ARGENTINA
41% SS
59% PC
6
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
WHAT DO PROXIMITY CHANNELS LOOK LIKE?
7
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WHO IS THE PROXIMITY CHANNEL SHOPPER?
85%
60%
75%
ARE WOMEN
ARE WALKING
HAVE PLANNED THEIR
TRIP TO THE STORE
WITH LESS ROOM FOR
IN-STORE ACTIVATION
Source: Nielsen Shopper studies
AVERAGE TICKET
BRAZIL = $8.80 USD
MEXICO = $2.90 USD
COLOMBIA = $5.70 USD
8
PROXIMITY STORE’S DYNAMICS DEMAND CREATIVITY
IN ORDER TO MEET SHOPPER NEEDS
SELF SERVICE
PROXIMITY CHANNEL
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Pack
Size
Product
9
SOME CATEGORIES ARE STRONGLY LINKED WITH
PROXIMITY CHANNELS
Have the potential to become alternative partners
MEXICO
BRAZIL
(2014)
(2014)
100
Non-alcoholic beverages
100
Cookies&crackers
95
RTD juice
95
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Toilet tissue*
90
Laundry detergent*
85
90
85
JAN
FEB
MAR
Source: Nielsen Retail Index - Countries
APR
MAY
JUN
JAN
FEB
MAR
APR
MAY
JUN
10
FOR TOP CATEGORIES, FEW DIFFERENCES BETWEEN
PROXIMITY CHANNEL AND SELF-SERVICE PRODUCT
AVAILABILITY AND PRICES
MEXICO
BRAZIL
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Distribution Distribution Average price Average price
PC
SS
PC
SS
Distribution Distribution Average price Average price
PC
SS
PC
SS
Non-alcoholic beverages
99
100
100%
100%
Non-alcoholic beverages
100
100
100%
86%
Cookies & crackers
96
100
100%
95%
Cookies & crackers
92
94
100%
106%
RTD juice
78
100
100%
88%
Gums & candies
90
92
100%
160%
Toilet tissue*
93
100
100%
166%
Snacks
93
94
100%
107%
Laundry detergent*
95
100
100%
70%
Beer
86
100
100%
85%
Numerical Distribution (%) and Price Index – 100% in Proximity channels
Source: Nielsen Retail Index - Countries
11
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
IMPLICATIONS FOR PROXIMITY STORES
With the current situation,
proximity channel shoppers
have also the “size of the bag”
restriction.
Small stores have a reduced
portfolio. Innovations, even when
relevant to the channel, could
take longer to be available.
Logistics – not easy to reach a
large group of independent
stores in order to be accessible
to a good number of consumers.
Third parties could result in
smaller margins to manufacturers
and retailers in order to fit
shopper’s pocket power.
12
WHAT IS HAPPENING IN THE
SELF-SERVICE ARENA?
IN ADDITION TO COMPETITION FROM PROXIMITY
STORES, SELF-SERVICE CHAINS FACE FRAGMENTATION
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
43%
MEXICO
SHARE OF TOP 5 RETAILERS (2013)
100% UTT+DTT
22%
VENEZUELA
1. Walmart
2. Grupo Soriana
3. Chedraui
4. COMEXA
5. Casa Lev
1. Makro
2. Central Madeirense
3. Farmatodo
4. Locatel
5. Cativen
36%
COLOMBIA
28%
BRAZIL
1. Éxito (Casino)
2. Carrefour
3. Olimpica + Sao
4. La 14
5. Cafam
1. Grupo Pao acucar
2. Carrefour
3. Grupo Walmart
4. Grupo Cencosud
5. Cia Zaffari
64.7%
CHILE
33%
ARGENTINA
1. Walmart
2. Cencosud
3. Unimarc
4. Tottus
5. MontSerrat
1. G. Carrefour
2. Jumbo Retail
3. Coto
4. Walmart
5. La Anónima
14
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SELF-SERVICE STORES SEEING YEAR-OVER-YEAR GAINS
DUE TO INFLATION
T. Basket (Country)
Var Val % RY June 14
T. Basket (Self-service)
Var Val % RY June 14
BRAZIL
3.6
4.2
MEXICO
0.8
4.5
COLOMBIA
0.6
0.1
ARGENTINA
2.1
7.3
CHILE
3.7
2.0
Source: Nielsen Basket Monitor
15
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
AND PRIVATE LABELS ARE SEEING BETTER RESULTS
T. Basket (Country)
Var Val % RY June 14
T. Private Label
Var Val % RY June 14
BRAZIL
3.6
23.1
MEXICO
0.8
16.7
COLOMBIA
0.6
-5.3
ARGENTINA
2.1
15.8
CHILE
3.7
0.6
Source: Nielsen Basket Monitor and Nielsen Global Study, 2014
75%
of LatAm shoppers believe
private labels are a good
alternative to registered brands
16
SELF-SERVICE STORES ARE A BETTER SHORT-TERM
OPTION FOR SHOPPERS BECAUSE:
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
More product
options
Economic
power of
promotions
In inflation
periods, people
tend to buy more
per trip to the
store
Big chains are
opening smaller
stores
17
HOW TO ENGAGE WITH
LATIN AMERICAN
CONSUMERS?
LATAM HAS LOWEST INTERNET PENETRATION BUT
DIGITAL MEDIA INVESTMENTS ARE GROWING QUICKLY
0.3
4.5
9.9
19.3
18.8
3.5
5.4
15.5
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
12.3
Latin America – Q3 2013
percentage growth
investment in media
57.6
+13.4%
12.4
vs. 3.2% globally
14.9
% SHARE OF
SPEND (YTD)
TELEVISION
Source: Nielsen Global Study – Media Pulse
Latin America’s users
spend the most time on
social networks – ahead
of Europe and the U.S.
7.9
RADIO
OUTDOOR
-3.5
% GROWTH PER
SEGMENT
NEWSPAPERS
MAGAZINES
INTERNET
CINEMA
19
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
ALTHOUGH THIS NOT ENOUGH TO MAKE PEOPLE BUY
THROUGH THIS MODALITY
Latin Americans are enthusiastic online shoppers, but the online retail infrastructure
has not yet caught up with offering conversion opportunities.
Other barriers to e-commerce success include Internet access, shipping costs, high
taxes and problematic delivery logistics.
Source: Nielsen Global Study – Ecommerce
20
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
KEY TAKEAWAYS
LatAm consumers are slowing down
consumption in a major part of the
countries (with the exception of
Brazil, Costa Rica and El Salvador)
Proximity channels are an important –
and challenging – way to reach LatAm
consumers and shoppers
In 2014, bigger stores are having better
results because their dynamics are
helping consumers/shoppers dealing
with their spending restrictions
Businesses in Latin America that seize the
opportunity of interacting with the planet’s
most engaged users will become pioneers
and certainly gain from the benefits of
having a social business, even though
shopping modality is still in the old style.
21