Traditional grocery retailers have been permitted to remain operational throughout the entire pandemic in Brazil as they are considered essential businesses, meaning that they were not obligated to temporarily close during quarantine restrictions. They do have to abide to restrictions such as ensuring all customers wear masks when entering the stores.
Amidst social distancing practices and consumers’ increasing demand for convenience, vending machines and automated convenience stores located in residential neighbourhoods gained momentum as relatively new competitors for traditional grocery retailers. Although they lack the face-to-face appeal of shopping at a traditional grocery retailer, where customers and owners tend to have a personal connection, these formats represent an alternative that thrives in a scenario of customers becoming increasingly familiar with automation applied to retail and expectations of enhanced convenience when shopping for a small number of items.
Traditional grocery retailers face competition not only from vending, but more strongly from other store-based channels. Traditional grocery retailers find in discounters and convenience stores the most relevant competitors in terms of selling space and product assortment.
While value sales (at constant 2021 prices) through the channel are predicted to gradually improve over the forecast period, traditional grocery retailers in Brazil are expected to come under pressure for a number of reasons. The most relevant one refers to consumers’ lower income levels, aggravated by the withdrawal of the federal government’s financial aid programme, which was offered to Brazilians who had faced unemployment or declines in their income as a result of the pandemic and its impact on the Brazilian economy at the end of the review period.
The dramatic increase in consumer interest in food and drink e-commerce was one of the most noteworthy trends to emerge in the country’s retailing industry from the pandemic. This trend is expected to continue developing over the forecast period, but it is unlikely to benefit traditional grocery retailers compared to large grocery retail groups.
Despite the various challenges, traditional grocery retailers can still benefit from the aggressive growth of e-commerce in general by serving as mini depots for digital orders. One example is start-up Kangoo, which offers logistics solutions for digital commerce.
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Traditional grocery retailing is the aggregation of those channels that are invariably non-chained and are, therefore, owned by families and/or run on an individual basis. For Euromonitor traditional grocery retailing is the aggregation of three channels: Independent Small Grocers, Food/Drink/Tobacco Specialists and Other Grocery Retailers. While there can be modern (i.e. chained) food/drink/tobacco specialists or other grocery retailers, due to the store's presence in the channel, these stores are still considered as traditional for Euromonitor International.See All of Our Definitions
This report originates from Passport, our Traditional Grocery Retailers research and analysis database.
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