Supermarket Industry in Brazil

Patrick Bruha

Staff Writer
The Brazil Business

Updated

15 August 2014

As a sector that has constantly grown in the past decade, the supermarket industry is drawing lots of attention from investors and entrepreneurs. In this article, we will take a look at the impressive numbers shown by the supermarket industry in Brazil.

Overview

In 2013, the supermarket industry reached its tenth consecutive year of growing revenue. In 2013, the sector had a turnover of BRL 272,2 billion, an increase of 5,5% when comparing to 2012. This steady growth is due mainly to four economic reasons:

• Increase in population
• Higher wages
• Reduced unemployment
• Increased consumption of items with higher prices

Despite knowing that this situation will not last forever, supermarket owners are still very optimistic about the future, stating that there is still a lot of pent-up demand.

In spite of Brazil’s much lower GDP growth rate, the supermarket industry is growing in size and sales, as well as the importance of the supermarket sector in the country’s economic performance. This is seen when we look at the sector’s share in the GDP, which went from 5.5% to 5.6% from 2012 to 2013.

The number of cashiers, as self-service checkout is not common in Brazil, is following the pace of the sector, attaining 210.600 check-out counters in 2013. An expressive share of Brazilian supermarket sector's total revenue comes from supermarkets with more than two checkout counters: 92.7% in 2013.

Even though the supermarket industry is showing a steady growth over the last ten years, the first half of the year 2014 was less optimistic, with the growing inflation caused by increasing public sector spending and the need for adjustments in the prices of items and services managed by the government. But, contrary to all expectations, the government decided not to put a negative impact on the prices and, instead, exempted various items of the cesta básica from tax, slowing the rise in inflation.

The supermarket industry is represented by ABRAS, the Brazilian Association of Supermarkets, headquartered in São Paulo.

Market size

The supermarket industry had a total revenue of BRL 272,2 billion in 2013, having a share of approximately 5,6% in Brazil’s GDP. Although the whole sector is thriving with accelerated numbers, it is up to the 20 largest supermarket chains to maintain the sector’s steady growth: these had a growth in sales of 10,7% from 2012 to 2013, and a total revenue of around BRL 173,2 billion.

Among the 20 largest supermarket companies, the one that showed the highest growth last year was Commercial Zaragoza, which had a revenue growth of 25.4% from 2012 to 2013, ending at BRL 1.4 billion, and holding the position of the 19th richest supermarket company in Brazil.

20 Main players

Regional distribution

There are 83.914 supermarkets in Brazil as of 2013, amounting for a total area of 21,1 million square meters.

The Southeast Region is the biggest in terms of revenue - 54,6% - and stores - 48,7%. The State of São Paulo, the biggest in terms of revenue and stores in Brazil, represents 29,3% of the total revenue of the supermarket industry. The State of São Paulo also accounts for 19.3% of all the stores in Brazil.

With more than 43,6 million inhabitants, the State of São Paulo is the most populous and also the richest State of Brazil. Taking this into account, it is no surprise that the State of São Paulo is the most significant in terms of revenue. Inhabitants in São Paulo spend, on average, BRL 1.832,6 per year in supermarket shopping. The ratio of inhabitants to supermarkets is 2.691 inhabitants for each supermarket in the state of São Paulo.

In comparison to Brazil, which has 201 million inhabitants, São Paulo inhabitants spend more per year in supermarkets, but they have fewer supermarkets per inhabitant. The average amount spent by Brazilians in supermarkets is of BRL 1354, with a ratio of 2.395 inhabitants for each supermarket.

Peculiarities

There are a few peculiarities concerning supermarkets in Brazil:

• Most of Brazil’s supermarkets offer parking lots for cars and motorcycles. Although the vast majority of the supermarkets offer free parking lots for their customers, in some of them, parking for a limited amount of time - generally 3 hours - is “granted” only if the customer spent more than a minimum amount of money - generally BRL 40
• All of Brazil’s supermarkets offer plastic bags, free of charge, for their customers to carry their purchased goods. This practice halted for a brief period, mainly in the state of São Paulo, after pressure from environmentalists, but resumed after just a few months. Today, supermarkets encourage customers to bring their own sustainable bag
• It is not rare to see customers eating or drinking products that they just removed from the supermarket’s shelves. This is an accepted behaviour, under the condition that the customer should take the empty or half-empty package to the cashier and pay for it.