Three Trends in Grocery Retail in Mexico
While international politics and inflation were drags on consumer confidence and the retail sector in 2017, grocery channels nonetheless posted fairly healthy growth. Remittances from the US continued to buoy spending, and the stabilization of the peso against the US dollar in 2017 (relative to 2016) allowed retailers and manufacturers to maintain reasonably steady prices. Below, Euromonitor International identifies three trends shaping grocery retail in Mexico in 2018.
Chained Proximity Formats Proliferate
Along with price and in-store experience, proximity remains a key factor for driving traffic in grocery retail in Mexico. With 50% of women and 40% of Mexican consumers overall reporting that they shop for groceries and household essentials once a week or more, a store’s convenience to home or work is important to consumers. The time-saving value of proximity formats, particularly in Mexico’s major cities, has long been a driver of sales for the traditional channel as well as convenience and forecourt stores. Increasingly, however, grocery retailers better known for their large supermarket and discounter stores are launching small formats to better reach proximity-focused consumers. Examples of this trend include Chedraui, which recently launched Chedraui Supercito with an average selling space of 300 square meters, and Walmart’s Bodega Aurrera Express, which now have more than 900 outlets. Soriana is also expected to invest in small stores in 2018 via new locations for Soriana Mercado and Soriana Express. There has also been a flurry of interest in forecourt retailing following the 2016 energy reforms.
Source: Euromonitor Global Consumer Trends Survey
Development of Premium Grocery
While consumers from social class A in Mexico spend the lowest share of their total expenditures on food and non-alcoholic beverages of any income group, they account for more than 40% of total expenditures on this category. 2016 and 2017 have seen the launch of a number initiatives by grocery retailers to appeal to this demographic. Soriana launched two premium formats, featuring a wide variety of gourmet and imported products. HEB represents another example. HEB continues with its HEB Marketplace format, which also offers high-end foreign products. HEB also launched in 2017 a new private label line called HEB Select Ingredients, which feature more natural ingredients.
Source: Euromonitor Consumer Spending by Income Bands Tool
Growing Investment in Online Grocery
2017 saw a much greater emphasis on online sales by a wide variety of grocery players. Relative newcomers to selling groceries online like Chedraui saw the fastest sales increase in 2017, but even established players such as Superama saw double-digit sales growth. Euromonitor does not include call center sales as part of internet retailing; however, call center sales of groceries are fairly popular amongst Mexican consumers. Unlike in the US, where shoppers are accustomed only to shopping in-store, the prevalence of call center sales help bridge the jump from shopping for groceries in-person to buying groceries on the go or from home. With regards to grocery delivery, Rappi, Cornershop, and Mercadoni continue to compete to win customers and grow the market of on-demand grocery delivery in Mexico. Cornershop and Mercadoni both completed additional funding rounds in 2017. Euromonitor estimates that grocery delivery companies unaffiliated with any one retailer processed approximately Mx$800 million in 2017.