Traditional grocery retailers recorded exceptional value growth in 2020, boosted by a new sense of community during the pandemic whereby proximity trade gained prominence as a result of greater at-home consumption, whilst holding competitive advantages such as proximity, size, convenience or speed. Nevertheless, the channel lost value sales and share in 2021 to other grocery channels as restrictions to control the spread of the virus were relaxed, and local consumers, spurred by greater mobility, started to venture outside of their homes more frequently, and outside of their local neighbourhoods as part of a return to a “new normal”.
The competitive landscape of traditional grocery retailers is highly fragmented, and dominated by smaller players under “others”. While the majority of players were able to keep their stores open during the quarantine periods, others such as Nespresso (a coffee specialist) or Hussel (a chocolate specialist), were forced to temporarily close.
One way for local players in the channel to adapt to the changing scenario was to accept telephone orders to ensure that they could still cater for their customers who had taken the decision to shield or were isolating as a result of the pandemic. Therefore, the number of home deliveries in traditional grocery retailers in Portugal also skyrocketed, as consumers began to demand home delivery services across all grocery retailers.
After impressive sales growth in 2020 at the height of the pandemic, traditional grocery retailers is anticipated to experience further declines following 2021’s weaker performance (at constant 2021 prices) over the first half of the forecast period, before levelling off to some level of stability. Although proximity is predicted to continue to drive sales, especially amongst older consumers or those living in more rural areas, the channel faces strong competition from other grocery retailing formats that will continue to invest in concepts of greater proximity and convenience, as well as incorporating digital solutions.
The number of independent traditional grocery retailers joining a convenience store franchising model as offered by the likes of Meu Super, Amanhecer and Supermercados Covirán, witnessed a significant increase towards the end of the review period, with this trend unlikely to wane over the forecast period. By joining a convenience franchising model, independent retailers have access to a wider range of products such as private label, services such as loyalty cards, and a distribution network that otherwise would not be available.
If operators of traditional grocery retailers are to compete more strongly, it is crucial that they improve their management of fresh produce in an integrated way across the entire value chain. This would offer potential for them to increase their sales and develop a highly effective advantage to face competition from other retailing channels such as convenience stores, supermarkets and even e-commerce.
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Understand the latest market trends and future growth opportunities for the Traditional Grocery Retailers industry in Portugal with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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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 DefinitionsThis report originates from Passport, our Traditional Grocery Retailers research and analysis database.
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