It looks as if the global pandemic is finally running its course, leaving behind a once familiar world that has now changed forever. The impact of COVID-19 has fundamentally shifted the way in which people live and work, how they meet, communicate and spend time together, how they eat and drink, and above all, how they shop and pay for goods and services. This has forced many FMCG brands and retailers to react to the changing needs of consumers and adapt to the ‘new normal’.
But as we leave one global crisis behind, it was inevitable perhaps that another would follow. While the end of the global health pandemic may be in sight, the spread of the economic fallout is now being felt by many regions around the world, particularly in countries that are less wealthy and more vulnerable to social, economic and political turmoil.
The pandemic has seriously impacted the world economy and will have a disproportionate effect on those living in countries that lack the necessary resources to deal with such disruption and upheaval.
Latam is bracing itself as these shockwaves hit the region. It’s expected that Latam will have a more challenging year than the rest of the world, due to rising interest rates slowing the economy even further and the instability in global commodity markets caused by the Russian invasion of Ukraine. When you add the halving of GDP growth with the doubling of inflation (from 4% to 8%) and unemployment (from 5% to 9%) then it’s easy to see why this might be the case.
Furthermore, Latam’s inflationary increases rose higher than value growth rates for the first time in three years, while price increases are 30% higher in foods vs. FMCG. We see a direct correlation between levels of unemployment and inflation and the rate of FMCG growth per country, which further compounds the economic challenges brought about by the global pandemic. Where levels of unemployment and inflation are below the regional average, consumers are better off.
Despite the challenging socio-economic circumstances faced by many countries in the Latam region, and strict mobility restrictions, the pandemic has accelerated the growth and increased the value of online channels. The widespread digitalisation of retail shopping services provides consumers with multiple options to purchase FMCG goods, providing better range selection, convenience and ease of access. The range of online shopping services now available varies from pure online ecommerce platforms, messaging apps - including the growing use of WhatsApp - and supermarkets’ own ecommerce platforms.
As we pick up the pieces left behind in the wake of COVID-19 and face new challenges head-on, this third edition of Winning Omnichannel Latam retail takes a look at the rapid change of retail channels in the region, the impact wider online penetration is having, and the role customer segmentation will play in the future growth of the industry.
