Traditional Grocery Retailers in Colombia

PROSPECTS

Traditional grocery retailers faces competition due to adjusting strategies

As part of the adjustment strategy to face growing competition from other channels, is the move beyond selling typical groceries, with traditional grocery retailers now offering services such as paying utilities, purchasing vehicle insurance, recharging public transport cards and even buying lottery tickets. Likewise, accepting private branded cards from large stores such as Éxito, AlKosto, and Supermercados Colsubsidio, increases the possibility of purchase, and by becoming a banking correspondent, ensures greater customer flow.

Allies from competing channels

Colombiana de Comercio with its brand AlKosto, although being a hypermarket, is recognised in the traditional channel not only as a valid competitor, but also as an allied mini-market from which shopkeepers visit for supplies. Therefore, it is one of its main customers that it wants to defend, by creating a shopping club or association, so that owners of traditional grocery retailers can buy in bulk, improve their offer and have a marketing plan.

Digital transformation will empower traditional grocery retailers

Different web platforms are still seeking to encourage traditional grocery retailers to join the digital economy, so that players become involved by performing online business and offer their customers the possibility of making purchases online. Taking advantage of a boost from the government with programs such as Empresario Digital or Mipyme Vive Digital, players will continue to be encouraged to use digital platforms to place orders with suppliers, and to record sales, manage inventories, accept other means of payment besides cash, as well as to sell to customers.

COMPETITIVE LANDSCAPE

More specific segments that contribute to better meeting consumer demand

The effect on household spending with the increase in VAT, has led local consumers to adjust not only their purchase preferences, but also the place to make them, sometimes changing traditional grocery retailers for the modern format, where they see benefits, especially in price. This is leading traditional channel players to begin focusing on more specific areas to help meet consumer demand more effectively, as they offer their customers more than simply a product.

Advantage of local neighbourhood and consumer relationships

The entry of modern channels such as discounters has given Colombians the possibility to purchase relatively good quality products at lower prices than those found in traditional grocery retailers, thus leading to the closure of some independent small grocers. However, one advantage that the latter holds is customer relations, being present in local neighbourhoods, the trust placed in this channel, as well as offering them additional services near their homes.

Remaining as strategic partner to big brands

Prior to the growth of private label, big consumer brands kept the traditional channel in their distribution landscape as one of their best allies. In turn, players in traditional grocery retailers had in strongly recognisable brands a good base for their product portfolios.

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