Despite declining sales resulting in the closure of many outlets, traditional grocery retailers (independent small grocers) still account for the highest value share amongst grocery retailers. Despite the expansion of shopping centres and supermarkets, neighbourhood stores maintain their space.
The number of independent small grocers is high in Ecuador, whilst their locations are strategically advantageous. Independent small grocers are easily found in nearly every neighbourhood in big cities and towns in rural areas, where they appeal to a captive audience.
Higher growth opportunities for the traditional grocery retailers channel are associated with the launch of smaller and more affordable pack sizes amongst different categories, which are not yet usually found in traditional grocery stores. The entrance of products from home care, beauty and personal care, and health and wellness packaged food looks to capture sales by offering new consumption moments and filling more contemporary needs.
Value sales through independent small grocers have declined in recent years but maintain an advantage over modern channels that is difficult to match; the personalised service and treatment received in these stores is a key factor in retaining customer loyalty towards purchasing on a daily basis. The owners are usually friendly with consumers, recommend products and sometimes give credit to their customers.
Corporación La Favorita is focusing on its low-cost brand supermarkets strategically located in popular neighbourhoods amongst the biggest cities of the country to compete directly with small independent grocers and small liquor and food stores, but with prices that average 10-15% lower than those in the traditional channel, affecting the latter’s sales. Another leading supermarket chain, Santa María, has also incorporated small stores, maintaining the brand name to exploit new opportunities in the channel.
Despite the difficult economic situation that many small grocers faced during the last years of the review period, innovative strategies such as offering additional services are underpinning the channel’s base. Amongst these services are bank services that offer cash without a cash machine, allowing cash payments on special electronic devices and projects such as “mi vecino” (“my neighbour”) or “banco del barrio” (“neighbourhood bank”), in association with the two biggest banks of the country, which have strengthened the position of grocers.
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