The recessive cycle that hit Brazil’s economy in 2014 had as one of its main effects the deterioration of the labour market. In an environment of high levels of unemployment, confidence levels were severely impacted and the recovery has been slower than expected.
One of the ways through which consumers are revising their spending is by choosing lower-priced channels when grocery shopping. Thus, warehouse clubs in Brazil recorded a significant increase in sales during the review period, both in value terms and in the number of outlets, sustained by the dynamic performance of atacarejos.
Overall, consumers who migrated to atacarejos are likely to stay there, even when their disposable incomes start to recover. This is because high-income Brazilians who once felt reluctant or even embarrassed to look for bargains have adapted their habits in the face of the economic crisis.
Atacarejos are known for their not-so-friendly appeal to consumers, with high ceilings and concrete floors that allows forklifts to enter the store and place boxes of products straight onto the shelves. For that reason, their most significant client base was until recently composed of small businesses, such as independent small grocers and foodservice players; however, in view of the migration of consumers to atacarejos, chained players are starting to invest in features that make the experience of shopping at an atacarejo more pleasant.
However, recent initiatives are still incipient and mostly conducted by large chained players. Overall, atacarejos seek to work with the lowest operating costs possible, having inventories inside the stores themselves so as to diminish logistics costs, for example.
Large retail chains such as Walmart, Carrefour and those of Cia Brasileira de Distribuição are converting some of their hypermarket outlets into atacarejos. The reason behind this is twofold.
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