Value-for-money formats and local retailers accounted for 41% of FMCG growth in the first half of 2021 as consumption patterns evolved post-pandemic.
Our new Retail Insights report, which looks at the second quarter results for Latam, has identified a new macroeconomic and social context driving purchases in the first half of 2021.
While uncertainty remains a constant – recovery will depend not just on the speed of the vaccination rollout but also on economic policies – behavioural trends first established last year have created ongoing shifts in behaviour.
Our analysis identified that in-home consumption has remained dominant in the first half of the year, that shoppers have reconfigured buying patterns, that ecommerce has adapted quickly to the omnichannel routines, and that the channel has also found new ways to meet consumer demands.
The overall impact of this behaviour has been a 1.4% drop in purchase volume across the region. Channels such as wholesalers and discounters, which adapted most quickly to the pandemic, continue to accelerate in the short term and are now visited by more shoppers. Other channels, such as convenience and pharmacy, have recovered since reopening.
Hypermarkets and supermarkets continue to be the most important channels in terms of spend and remain one of the most visited retail locations. They continued to grow in the first half of 2021, albeit at a slower pace due to higher prices and a reduction in shopping frequency. The big challenge they face following the reopening and reactivation of local channels, is to encourage shopper loyalty, which has already declined in the first half of 2021.
We’re also seeing evidence that the economic impact of the pandemic is affecting shopping behaviour. Promotions have been reactivated and increased in the hypermarket and supermarket channels, and are once again playing a key role in attracting bargain hunters. These may be some of the most visited outlets in Latam, but consumers are also shopping elsewhere in the search for value for money.
While the search for savings continues to be a crucial driver of success, local supply also matters. We’re seeing local stores build basket size via wider ranges, new payment methods, and new access channels.
As you would expect, online has become increasingly relevant, even if growth is likely to return to normal rates now that there is a much wider selection of channels for consumers to choose from. Developments such as O2O (online to offline) services are helping to build penetration, with modern online trade platforms as the big winners in this space.
Reach out to our experts to get the report, or for more insights around consumer behaviour in Latin America.