Although the two overarching features of the FMCG landscape in recent years have remained consistent – stagnation and channel fragmentation – we’ve witnessed some shifts in how growth is distributed between channels and across countries.
Channel growth in Latam is a complex and varied picture, driven by two particularities: the level of quarantine restrictions in individual countries, and the channel structure that already existed in the market. Two distinct trends have emerged. On the one hand, where restrictions were heaviest, shoppers favoured smaller-format stores because of their proximity to home. This was the case in Argentina, where lockdown was strictest, as well as Colombia and Peru. Where restrictions were less tight or with more specific measures in each city or country, including in Mexico, consumers tended to favour the modern trade (large format stores). These gave people an opportunity to make larger purchases, and reduce the number of trips they made. Whereas modern trade channels were growing in Brazil at the beginning of the quarantine, as the rules became stricter, proximity became more important.
Ecommerce was already growing fast in Latin America, but COVID-19 accelerated the trend, mainly due to new users trying the channel for the first time. This led to an increase in penetration: 6% of households across the region bought something via ecommerce during lockdown.
Other factors included the entry of new delivery platforms, the growth of existing platforms, and ecommerce players partnering with discounters to offer home delivery.
Penetration is highest in Colombia at 11.9%, which has overtaken Argentina as the Latam ecommerce leader. Most of its growth came from people who already shopped via this channel, but there was also a high number of new users – which suggests there may now be a lower barrier to entry.
In Mexico, ecommerce expenditure grew tenfold during quarantine, with triple-digit growth in value share (122.8%) that came in part from a high proportion of new buyers. The shift was also driven by shoppers switching from other channels, such as self-service, supermarkets, minimarkets and traditional trade.
Discounters In Latin America, Colombia bucked the trend of stagnation in the discounter channel that was observed across the rest of the globe. Already well developed in the country, the COVID-19 pandemic has stimulated further growth within the channel: discounters increased their sales value by 39% during the three months of lockdown, and reached 88% of households.
Down the Trade Until the year 2019, Down the Trade had been losing importance. With circulation restrictions in the COVID-19 context, this channel is gaining importance in most countries in Latin America. The stronger and longer the restriction, the more prominence the channel has gained.
At times like these, nutrition and health become even more important, as well as the search for affordable prices, with Mercados, or Central Markets, being a well perceived channel for these attributes in Peru. This channel gained 7 pp importance in April vs. MAT 2020
In Brazil, the current picture has brought on changes in the consumption journey, with emphasis on the Traditional Retail, which attracts more than 1.5 MM households, more frequently. Regarding home supply, shoppers declared that the most relevant attributes for choosing the POS are: channels with less concentration of people and proximity.
For the Traditional Trade, the main shoppers are in Social Class D/E, up to 29 years old and with young children, with emphasis on the increase in payment methods Cash (+2.7 p.p.) and Meal Vouchers (+1.8 p.p.)
Likewise, 15% of all households emphasize "there are brands that can only be found at this channel”.
In a context where there were different levels of restrictions during the pandemic, we saw completely different developments by country in terms of channels and shopping missions. Proximity has become key in countries that did experience a true lockdown, such as Argentina. The traditional trade was redefined during confinement and managed to grow on stock-up & replenishment shopping missions, in addition to the daily purchases.
The Traditional Trade has reached a historical share, driven by more buyers and higher purchase frequency in Street Markets and Stores in Chile.
