The Modern channel had a good year in 2020 but its Achilles’ heel is the need to regain frequency and shopper loyalty.
In all markets it is a vital component of FMCG consumption – attracting 35.7% of household spending. More than 88% of Latin American shoppers use a range of formats; Hypermarkets, Supermarkets, Discounters and Convenience outlets.
In Colombia we see growth in FMCG being driven by Discounters, while in markets such as Ecuador and Peru, Supermarkets are gaining relevance over Traditional channels.
The opposite occurred in Chile and Argentina, due to mobility restrictions which benefited the Traditional channel.
Across the region, the channel saw growth of 14.3% driven by a significant increase in household spending. This occurred despite a reduction in the number of visits – down 5.4% – thanks to an 18.1% increase in average purchase value (price increase) as many consumers decided to indulge in more pricy options (product mix more premium).
Retailers will have to rely on a safer environment for people to move around and work hard to restore shoppers' confidence in the safety of purchasing in their stores.
Private Label continued to steal share from brands, albeit at a slower rate than previous years.
In Eastern Europe and the US, Private Label gained share. The result was a +0.3% share gain in the US and significant gains in Romania (+2.5%), Serbia (+2.2%) and Hungary (+1.9%).
Although Private Label remains much smaller in Latin America, it did experience the biggest gain of any individual market with +3.5% in Colombia, where growth was driven by the rising power of discounters.
Other Latin American markets where Private Label performed well are Peru and Ecuador, where it was the fastest growing type of brand, albeit from a much smaller base than in Colombia, where it now has 22% value share. Value share in Ecuador rose from 3% to 4% and from 2% to 3% in Peru.
With economic challenges set to continue in 2021, own brands and value brands are likely to continue to gain space in shopping baskets.
Promotions have been a key tool helping FMCG retailers and brands to grow. When done well, they encourage incremental growth through additional purchasing, which wouldn't ordinarily have happened.
