Six key trends in LatAm in shopper behaviour
Fewer trips and more units per occasion is one of the new behaviours adopted by Latin American shoppers.
Kantar Worldpanel today launches its Shopper & Retail Dynamics LatAm study revealing the key trends in shopper behaviour in Latin America.
The study analyses the behaviour of more than 41,000 households in 10 countries in Latin American over the last year (52-weeks to June 2015).
“From this analysis, we have identified six trends that are present across the region and that determine how the shoppers in Latin America buy,” says Flavia Amado, Shopper & Retail Manager LatAm.
The six key trends for Latin America:
Selective Growth: In the last 12 months, Latin America experienced the greatest growth in retail value (+12.2%) in the world, compared to other regions such as Europe (+0.5%) or Asia (+4.1%). However, purchase volume in Latin America remained stable (-0.2%). The driving force behind this value growth is the inflation rise in several countries, for example Venezuela where it exceeds 96%. Latin America is experiencing ‘selective growth’ because there is no uniformity in growth across countries. There are differences between regions, categories and channels, among other factors, which contribute to the overall growth in the region.
Purchase Transformation: The purchase dynamic has evolved toward fewer trips and more units per occasion. In 60% of LatAm countries, shoppers reduced their frequency of purchase. This reduction of frequency is most notable in Venezuela (-8%), Brazil (-7%) and Bolivia (-6%). Nevertheless, if we compare the frequency of purchase of the LatAm countries to Europeans – 226 trips per year vs. 176 -, it remains very high.
Fewer trips also mean fewer channels visited: the number of LatAm households that visit seven or more channels in a year has decreased two percentage points to 54%.
The decrease in shopping trips and number of channels visited has affected the performance of the main channels in the region, such as the Modern channel. However, this year has seen countries with a low development of the Modern channel, including Bolivia, Colombia and Ecuador, increase their expenditure, as well as the number of units on each purchase.
Proximity and Convenience: It is a fact that Latinos are searching for proximity and tradition. “Proximity is the key word, because 68% of Latinos are looking to shop near their home and to have good relationship with the seller” says Flavia. The Traditional channel gains share in five out of ten countries in LatAm. Bolivia and Peru spend the most in this channel, 69% and 68% respectively. While the Traditional channel saw the greatest growth in Venezuela (+8.1%), Central America (+4.6%) and Ecuador (+2.0%).
Cost- Benefit: This is an equation that many channels have taken advantage of and found important growth as a result. One example are the Discounters, which provide limited product ranges, low prices and private labels and have grown globally in Europe and countries such as Argentina, Chile, Colombia and Mexico. Wholesalers have been similarly successful. They offer low prices for bulk purchases and this formula has enabled the channel to become the third largest, in terms of consumer spend, in LatAm. Brazil and Argentina boosted the growth of Wholesalers.
Promotions: In 70% of countries, products with promotions have had a higher growth than those without promotions. Argentina (+ 55%) and Mexico (+ 26%) are the countries that significantly increased this spend on promotions. "Of the various promotions in the market, price discounts stand out. Price discounts hold 79% value share in LatAm.
In Brazil this is particularly important. Of the 10% of purchases Brazilian shoppers make with promotions, 87% of the products have price discounts," comments Flavia.
Another significant promotion in LatAm is "take more and pay less" with 9% value share. In Ecuador, 17% of purchases with promotions are made through this offer.
Downtrading: Even though private labels have grown significantly in LatAm, there is still plenty of opportunity for development. Private label does not hold more than 10% value share in any of the ten LatAm countries analysed. Compare this to European countries, like the United Kingdom, where private labels reach a value share of 48%. "There is still a huge space for the development pf private label in the region and the growth of Modern channel is integral to making this happen," adds Flavia Amado.
In line with growth of private label, 59% of expenditure in LatAm is made on Medium & Low brands. This trend is amplified in countries like Peru (68%) and Venezuela (96%), where the economic situation of the country and control on retail does not allow the shopper to choose which type of brand to buy. It is the availability of products at the point of sale which determines household purchases.
These six trends show that although there are no single pattern in Latin retail, there are shopper behaviours and similarities that drive consumption across the region. The next step for manufacturers, retailers and brands is to consider how these trends can benefit business development or how to they can adapt their strategies to them.