Portfolio optimisation continues to drive positive results for GPA

Date : 21 May 2020

Brazilian retailer GPA (part of the French retail group Casino) has reported gross revenue of BRL15.9 bn (US$2.8 bn) for Q1 2020. This represents a significant increase of 15% year-on-year (YOY). Its strong performance is largely driven by the maturation of cash and carry stores opened over the last 24 months, combined with a positive sales uplifts from optimising its core estate.

Core estate delivers 6.1% sales growth in Q1…

Gross revenue for GPA’s multivarejo (non-cash and carry/core estate) was BRL7.3bn (US$1.3 bn) in Q1, a 6.1% increase YOY. Same-store sales (SSS) grew by 6.6%.  

In the first quarter GPA closed five unprofitable hypermarkets. Three will be converted to the popular Assaí banner. One new Minuto Pão de Açúcar convenience store was opened. Proximity stores continue to deliver strong sales growth, with an increase of 22.5% reported in Q1.

In-store café in GPA’s latest Minuto Pão de Açúcar

Source: IGD Research

Adega (wine house) in GPA’s latest Minuto Pão de Açúcar store

Source: IGD Research

…as stores better meet changing consumer demands

GPA is converting all its Extra Supermercado supermarkets to one of two banners: Mercado Extra or Compre Bem, which it launched in 2018. So far 128 of the 179 stores have been remodelled and it aims to convert the remainder by the end of 2020.

The Mercado Extra and Compre Bem banners have been better aligned to meet customer’s needs. The 100 stores converted to Mercado Extra have seen a sales uplift of 11% and the 28 Compre Bem’s grew sales by 42%. The new banners offer more perishable lines than before and, counters (including fresh bakery and meat counters) have been implemented.

This has been key to driving sales per shopper as previously customers used these stores for specific items but choosing to visit specialists (bakeries/butchers etc.) for others. With the updated range, customers can conveniently perform their whole shop at one location. For more information on these banners see our article here.

Inside a Compre Bem store, São Paulo

Source: IGD Research

GPA has also been renovating stores under its premium Pão de Açúcar banner to its latest G7 store design. The 46 stores it has converted to date have seen strong sales growth of 14%. Subscribers can find our report covering one of GPA’s latest G7 stores here.

Horta do Pão (vertical garden in a G7 store)

Source IGD Research

 

Bakery in a G7 store

Source: IGD Research

Sales of GPA’s private labels currently represent 14% of total sales in its core estate. It aims to reach 20% sales penetration in 2020.

Assaí performing significantly ahead of competition

Sales for GPA’s Assaí cash and carry banner now represents 53.8% of its gross revenue in Brazil. In Q1 Assaí sales were BRL8.5 bn (US$1.5 bn), up 24% YOY, with same-store sales growth of 7.1%. This strong performance was driven by ongoing store expansion and the maturation of the 40 stores it has opened in the last 24 months.

Source: IGD Research

GPA says its Assaí cash and carry banner is growing significantly ahead of its competition, including its main competitor Atacadão (owned by Carrefour). GPA opened one Assaí store in Q1, taking its total under the banner to 167.

GPA continues to open Assaí stores in new regions of Brazil, enabling it to reach new customers. Expansion is set to continue, with 17 stores currently under construction. However, this will be slowed by the effects of the COVID-19 pandemic.

Accelerated evolution of GPA’s digital ecosystem

GPA is the market leader in food ecommerce in Brazil. Ecommerce has grown by 82% YOY and is contributing positively to the business’s evolution. The channel now accounts for 3% of sales for the Pão de Açúcar banner and 7% of the sales for its other core banners.

The business opened two new distribution centres dedicated to its digital operations in Q1. These will support the accelerated growth of the online channel in the medium term.

Digital transformation highlights:

  • Express model implemented in 130 stores in Q1 and now present in 260 stores
  • Click and collect implemented in 125 stores (growth of 129% YOY)
  • 76% growth in customers across its two websites
  • loyalty apps have been downloaded more than 12m times and reached 3.3m unique monthly active users (up 30% YOY)
  • Sales for GPA’s James delivery platform were eight times higher in Q1 2020 versus Q1 2019, with a 130% increase in the average ticket
    • GPA has registered more than 2.5m downloads of the platform
    • James is now available from 134 stores, serving 25 cities

 

Please note: these photos were taken pre-Covid-19 and so the stores may not look the same.

We visited GPA's latest Pão de Açúcar G7 store in São Paulo, Brazil. This is one of GPA's highest performing supermarkets under this banner. It showcases several new innovative features, some of which have been developed in partnership with Brazilian start-ups.

This report provides insight on the evolution of last mile, rapid delivery services in Latin America. This includes both global businesses that have entered the region (e.g. Uber Eats and Glovo) and the extremely successful local players (such as Cornershop, iFood and Rappi).

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