When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .


Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

Time To Downsize Hypermarkets? A Reboot For Argentine Retail

Responding to changing consumer habits, big box retail in Argentina have started converting outlets to offer an easier and cheaper shopping experience.

In a Buenos Aires supermarket
In a Buenos Aires supermarket
Natalia Muscatelli

BUENOS AIRES — Facing low-growth forecasts in 2018, on top of years of declining sales, Argentinian supermarkets and hypermarkets are seeking new ways of enticing customers who increasingly are turning away from massive big-box shopping experiences. It is not just about inflation and Argentines' declining purchasing power, it is also a response to changing consumer attitudes that can be seen worldwide.

For the big chains, falling consumption figures and high rent costs mean supermarkets are no longer profitable per square footage.

It is a time of general crisis for big retail surfaces. Last week, for example, France's Carrefour — which has many outlets in Argentina — announced it would convert 16 hypermarkets into wholesaling outlets, to reduces shelving costs and capture customers buying in bulk to get the best prices.

Meanwhile, wholesalers Diarco are taking the opposite approach. Just a month ago, the firm announced it would open smaller, neighborhood stores. These typically cover around 300 square meters and target both local shopkeepers who tend to buy there, and ordinary shoppers who had previously frequented big stores or Chinese markets. Vital, another wholesaler, is reportedly planning similar moves this year.

Asian businesses in Argentina, whose total sales rose barely 5% in 2017 after falling 12% in 2016, are also planning new distribution centers that double as wholesale outlets. Yolanda Durán, head of the Asian business owners' association CEDEAPSA, said the sector would cut commissions paid to wholesalers and assure better product prices by dealing directly with the industry. This could cheapen products by up to 28% compared to prices in big supermarkets.

Welcome to Carrefour in Mendoza, Argentina — Photo: Tjeerd Wiersma

Walmart's Juan Pablo Quiroga explained the U.S.-based retailers strategies for 2018, citing three fundamental points: pricing, innovation at points of sales and electronic commerce. Walmart will keep its Every Day Low Price policy, Quiroga said, and boost its brand by cutting down on one-off promotions ("two for one"), to dissuade people from visiting their supermarkets only on specific days. Innovation will include opening new businesses inside their premises to lower operating costs. These will act as rent-paying "tenants', like laundries, kiosks or payment centers inside big shopping surfaces.

You have to adapt to customers' changing habits.

"The traditional hypermarket of 13,000 square meters is losing traction across the world," says Quiroga. Which is why, he explains, the brand wants to reduce its own sales surfaces to as small as 6,000 square meters, cutting logistical costs.

Walmart's online sales are a source of potential growth, with its Store Pickup service, used for online purchases, proving increasingly popular. The service is available in 21 of its 106 outlets in Argentina, and sales with Store Pickup have reached 1.8% of all its sales.

Stay in your car

Other supermarkets like Cencosud, Jumbo, Disco and Vea are introducing very similar "drive thru" or al auto services, where the shop will load what you bought online into your car. This is available in some outlets inside the capital and the Buenos Aires province, allowing customers to buy online or by phone and take their purchases home for free, "without getting out the car and in the hours that suit them best," declares Jumbo, a Chilean brand.

Such novelties have become crucial for retailers, says Quiroga, as "you can't just open branches to grow, and a big part of your investment must go into conversions."

He says the major retail players must evolve with the times. "The hypermarket model of the 1990s isn't working like before," Quiroga concludes. "It is not enough just to have big retail space to cover your market today. You have to adapt to customers' changing habits."

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Gaza Fighting Resumes, Quick COP28 Deal Signed, Longest Hit Song

Palestinians inspect damages after an Israeli airstrike destroyed a house in Rafah, southern Gaza, as hostilities resume after a week-long truce between Hamas and Israel.

Emma Albright & Valeria Berghinz

👋 Alò!*

Welcome to Friday, where fighting resumes in Gaza after the temporary ceasefire between Israel and Hamas expired, a COP28 deal is signed for a fund to pay for climate damage in poor countries and a rapper breaks a billboard record with a flute. Meanwhile, Mastercard is arriving in China following Xi Jinping’s “dinner diplomacy” last month in San Francisco, reports Chinese-language media The Initium.

[*Haitian Creole]

Keep reading...Show less

The latest