The future of the supermarket sector in Brazil includes the replacement of hypermarkets with cash-and-carry stores and the expansion of online sales. The statement was made yesterday by the Vice President of the Property Sector of the Brazilian Association of Supermarkets (Abras), Rodrigo Cantusio Segurado, while participating in the opening of the national convention for the sector, held in Campinas. The two largest companies in the sector in the country, which are controlled by French groups, have already announced investments in stores that operate wholesale, but also serve retail customers.
One of them started, this year, investments of R$ 5.2 billion in the conversion of its 71 hypermarkets in Brazil – three of which are in Campinas – into wholesale stores. Another hypermarket chain last month announced investments of R$ 2 billion in the country, focusing on opening 20 new units in this format and in neighborhood stores (supermarkets in the neighborhood), but did not reveal how many there would be.
Another data that shows this trend is that of the 163 new stores planned for this year in the country, practically half are drugstores — a total of 80 — while 83 will be supermarkets, according to the sector.
“The hypermarket is dying as a format,” said the businessman. For him, the future of brick-and-mortar stores involves adopting simpler neighborhood models to serve smaller areas. According to Vice President Abras, changes in the segment are determined by customers. “The format to be adopted is defined by the consumer, who today is looking for lower prices and new services,” he explains.
According to Vice President Abras, wholesalers have a slimmer, less sophisticated model and turnover of goods that can offer lower prices to the end consumer. As a result, they have better profitability, with profit margins between 5% and 8%, compared to 3% for hypermarkets.
Currently, the national supermarket sector earns R$ 611 billion per year, equivalent to 7.3% of gross domestic product (GDP), consisting of 92 thousand stores, which create 3 million direct and indirect jobs and serve 28 million customers daily.
The convention in Campinas gathers around 1,200 business people and supermarket managers, who represent 90% of the sector’s revenue. Among them was businessman Abílio Diniz, who was also one of the speakers.
Rodrigo Cantusio Segurado also sees room to increase online sales. After experiencing an exponential 900% increase between March 2020 and July 2021, according to a survey by a retail technology company, due to social isolation caused by covid-19, virtual shopping has returned to pre-pandemic levels.
They currently represent between 1% and 5% of sales in Brazil, compared to 51% in China and 25% in the United States. In order to ensure more attractive prices, the vice president of Abras claims that companies should take advantage of the supermarket ecosystem, leaving out the engagement of third parties. This can be done, for example, by using credit cards and industry financing (instead of resorting to the financial market), marketplaces (virtual spaces that bring together several e-commerce stores) and new technologies.
The Abras convention gathers around 1,200 business people and supermarket managers, including businessman Abilia Diniz (Rodrigo Zanotto).
At the opening of the convention, the president of Abras, João Galassi, also presented the demands of the industry to the National Congress to improve the business environment. Among them is a change in the law dealing with fines imposed by consumer protection services, Procons, currently based on the value of the product and the company’s revenue. For the entrepreneur, the assessment dosimetry must be changed so as not to affect the financial health of the assessees.
After receiving the request, the president of the Parliamentary Front for a Competitive Brazil, federal representative Alexis Fonteyne (Novo-SP), defended the change. “Applying disproportionate fines becomes a cost and has two consequences: it destroys the company or it is passed on to the consumer,” he said. Galassi also defended the permission for supermarkets to sell medicines that do not require a doctor’s prescription. According to him, it is a means of universalizing access to the product.
The Abras president also defended changes to the credit card market as a way to reduce service fees. He mentioned that a change has already been made with food cards, through law 14.442, passed this month. Another claim was to reduce state taxes imposed on the basic food basket, as was the case with federal taxes.
For Galassi, the sector is going through a “good moment”, with sales increasing by 2.57% between January and July this year. Compared to June, the highest was 7.75 percent, according to a study by the Department of Economics and Research of Abras.
The president of the entity points out that the trend is optimistic for the coming months with regard to the macroeconomic scenario. Continued growth in consumption is expected due to the increase from R$400 to R$600 of Auxílio Brasil (formerly Bolsa Família), the anticipation of the 13th salary of pensioners and retirees, the extraordinary withdrawal from the Severance Fund (FGTS), Income tax refund, reduction of taxes/taxes (energy and fuel) and a decrease in the unemployment rate, which at the end of the quarter from May to July was 9.1%. In the same period in 2021, it amounted to 13.7 percent.
The Abras National Convention will end today with the participation of two candidates for President of the Republic, Jair Bolsonaro, who is seeking re-election, and Ciro Gomes (PDT), who will be heard by the participants. The invitation was sent to the top four in the voting intention polls, but Luiz Inácio Lula da Silva (PT) and Simone Tebet (MDB) will not be able to participate due to previously assumed commitments.
They highlighted the possibility of the participation of their vice-president Gerald Alckmin (PSB) and senator Mara Gabrilli (PSDB). However, the supermarket entity argued that it was necessary to maintain equality in relation to the other two that confirmed their presence.
Bolsonaro, who is in New York (USA) for the opening of the General Assembly of the United Nations (UN), will participate virtually at 2 p.m. Ciro Gomes will personally participate at 11:30 am.
During the convention, Galassi even joked about the issues that plague him when he appears in social media photos with presidential candidates. “They ask if you can. Of course you can, I am a trader, we are traders”, he said. “It is very important that the class entities participate in the country’s political program, subsidizing the Forces with information and technical knowledge that provides subsidies for decision-making that creates concrete advances,” he defended.
“That’s why we have to talk to all those who in a few months will represent the Brazilian population at the state and federal level,” he added.
In his statement to the sector, Galassi also spoke about the elections in October. “Here I record my wish that the entire electoral process takes place in an ethical, balanced, harmonious manner and with great respect for the republican values necessary to maintain the rule of law,” he said.
At the opening of the Abras Convention, Mayor Dário Saadi (Republicans) highlighted the scenario of Campinas as attractive for receiving investments from the sector. Among the positive aspects: a population of approximately 1.2 million; to be the 10th richest city in the country; its strategic position in the country — five of Brazil’s major highways pass through the city, it has Viracopos International Airport and it is only 172 km from the port of Santos.
He also highlighted the reduction of municipal taxes and agility in approving projects as conditions that make the city attractive for new supermarkets and distribution centers.
The supermarket chain, which is the largest in the interior of São Paulo and 15th in the country by revenue, according to the Abras ranking, has opened two new stores in Campinas, reaching a total of four. The new branches, in Jardim do Lago and Vila Itapura, created 400 new jobs. A fifth unit is under construction in the Taquaral district and will create another 200 jobs. The chain currently has 53 stores in 17 cities in São Paulo and employs around 10,000 people.