Multinational Retailers Go Mini As Argentina Gets Poorer

Globalization downsized? Taking lessons from Chinese immigrant-owned shops, foreign chains Carrefour and Walmart are opening smaller markets to make shopping faster and cheaper.

A Walmart store in Buenos Aires
A Walmart store in Buenos Aires
Martín Bidegaray

BUENOS AIRES — As high inflation gnaws away at their purchasing power, many Argentines have altered their grocery shopping habits, changing not only what they buy but where they buy it.

For some, that means abandoning U.S.-style supermarkets (and even bigger hypermarkets) in favor of doing their shopping at smaller neighborhood stores. The changes haven't escaped the attention of supermarket chains, which are trying to accomodate customers by morphing certain locations into smaller, more accessible estabishments.

"There is no customer who just shops in hypermarkets or supermarkets. The consumer chooses between an increasing number of channels," says Pablo Lorenzo, head of new formats at the French-owned multinational market chain Carrefour.

Carrefour and the Spanish chain Día are leading the trend in opening smaller, local stores. Walmart, through its partner Changomas, is making simlar efforts in Latin America. In doing so, the chains are also competing more directly with open-all-hours Chinese-owned shops, which had expanded quickly throughout the Greater Buenos Aires area but now seem to be going in the opposite direction. Chinese shops had 400 fewer sale points in 2014.

Carrefour plans to open 30 "Express" markets this year, and Día is aiming for 50 similar stores. "This choice of closer to home can be seen in Brazil and Mexico too," says Juan Manuel Primbas, country chief for consultants Kantar Worldpanel. "People are devoting less time to shopping. With the local economic crisis, there is a hyper-rational consumer who is less likely to give in to impulse purchases, and is thus buying less."

A Chinese model

Pablo Lorenzo says Carrefour's decision to open more Express shops is a direct response to how Chinese shops have performed in Buenos Aires. "The Asians made very good progress after the crisis and informal outlets made solid advances in neighborhood shopping. That prompted us to see how we could grasp this market, in which Carrefour is highly developed elsewhere in the world," he says.

Photo: Tjeerd Wiersma

The estimated number of Chinese groceries here is between 9,500 and 10,000. That's a market the big brands are desperate to bite into. Carrefour Express makes up 365 of the chain's 580 stores in Argentina. In 2014, they represented 9% of its turnover of 36.6 billion pesos (about $4.2 billion). The average receipt in an Express store comes to 68 pesos (a little under $8), while average spending in a Carrefour hypermarket is 450 pesos (about $51). But the number of transactions in big shops declined (approximately 3%) while those in Express outlets rose 9%.

Primbas says traditional grocery stores are losing out as shoppers seek out neighborhood minimarkets and "buy a restricted selection, between seven and 14 categories (of products)." People do not want to pay more, he says, "which is why they are choosing these minimarkets."

Another strong contender is Día, which follows a franchise model. "Día's concept is its own brand and the cheaper, generic product, which allowed it to enter the greater city area. Now it wants to reach middle class and upper middle class districts like Barrio Norte and Palermo," says Primbas.

Día was formerly part of Carrefour. The firm refused to respond to Clarín's request for comment.

Until last year, Carrefour Express did not stock fresh produce or meat. This year they plan to introduce those items gradually. "This complements our neighborhood selection of products. Right now we are strong on frozen food, drinks and cleaning products," says Lorenzo. "We work on the basis of demand. Customers make up their list and the idea is to be able to provide the largest range of items. We don't have 20 different types of noodles like a hypermarket, but we have three or four of the top brands, plus our own label."

Another brand eyeing the sector is Cencosu, owners of Jumbo, Disco and Súper Vea. Meanwhile, Walmart is entering this market through Changomas.

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In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

— Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.

It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park


Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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