Fragmented retail channels
Shoppers have more choice than ever
Driven by economic challenges and rising prices, rather than the health challenges of recent years, Latam consumers are continuing to change the way they shop in a post-pandemic world. With no restrictions on where and when they can shop, omnichannel shoppers are the driving force behind FMCG growth in the region, which saw value sales grow 16% in 2022.
More retail channels are attracting more shoppers than ever before, leading to fragmented spending and a decline in customer loyalty. For Latam shoppers today, the choice is endless, with 18 different types of retail channels available. Consumers visited 8.3 channels on average last year, an increase of 7% on 2022.
Although shoppers are adding new channels to their portfolio – at the rate of one or two per year – basket size is decreasing, with less being spent across more channels.
In the last two years, consumers in Latam have lost 25% of their purchasing power.
Value for money channels, such a discounters and wholesalers, benefitted more than others in 2022.
Down the trade, however, which includes independent and local stores, was most negatively impacted as shoppers looked for lower prices. Baskets where price increases were highest, such as dairy, were more affected. At the same time, specialist channels, like pharmacies and health and beauty stores, benefitted by offering a range of specialised and premium products with a focus on price and promotions.
But in a region where half of all consumers are categorised as low-income, households most impacted by rising prices are looking beyond the discounters to meet their needs. As one of the most important channels in the region, modern trade is increasingly attracting low-income shoppers, who contributed to 50% of the growth in 2022 compared to the previous year.
Discount channels have continued to invest in the region through product diversification, points of sale and new technology. In Colombia, for example, incumbent, Jerónimo Martins, opened its 1000th Ara store in 2022, while Ísimo entered the market for the first time, opening stores offering both private label products and brands.
The modern gains relevance for this type of social level.
The challenge:How to correctly meet the needs of new shoppers
