» RETAIL Efficiency, foresight and ambition has enabled traders to cash in on rising consumer spending
Innovative sales st fight off the compe
Argentines love to shop, and retail has become very big business during the last two decades. Today, retailing is one of the biggest sectors of the economy. Once dominated by neighbourhood shops and local markets, the retail sector has switched to modern selling methods with a vengeance as supermarkets begin to sprout up all over the country. Leading the charge has been Carrefour, the French retail chain that championed the out-of-town 'hypermarket' - the mega-stores stocking just about everything. Carrefour took a huge gamble when it opened its first supermarket in Argentina in 1982 at a time when the country faced economic collapse in the wake of the Falklands War.
"We bet on the country and this has always given us a significant advantage over our competitors," recalls Carlos Richter, president of Carrefour Argentina. By the end of last year, the company owned 22 super-markets across Argentina and many other smaller outlets. It employed 9,000 people in the country and traded with over 4,500 local suppliers. Those figures are set to increase dramatically as the company consolidates on its merger last year with its big French rival, Promodes, which also has stores in Argentina.
Mr Richter estimates that the combined French operations will have annual sales of up to $4.7 billion and a 40 per cent share of the entire Argentine retailing sector. This will make Carrefour the undoubted leader in Argentine retailing and the second-largest company in the country. And Carrefour intends to continue to grow. "We have two new stores in the pipeline for 2001, and two or three will be built in the next four years," says Mr Richter.
Fierce competition for the custom of Argentina's army of shoppers, who are becoming ever more price-conscious, has prompted several mergers and acquisitions in the retail sector in recent years. Two of the biggest pharmaceutical distribution chains, Drogueria Monroe and Drogueria Americana, have also joined forces. The newly-established group has 12 warehouses and distribution centres, and it distributes around 13,000 products to more than 7,000 chemist shops spread across the country. Argentina has the highest per capita consumption of medicines in South America, but the distribution chain has largely been run in an old-fashioned way.
Chemists have traditionally been small, family-owned businesses. In the past, says Oscar Mazza, general manager of Drogueria Monroe-Americana, the chemists have tended to see the distributors as enemies, while distributors saw the chemists as captive clients. Now change is in the air, he adds. "Monroe-Americana aspires to be an absolutely professional distributor, transparent in its decisions, and committed to providing the best service to the chemists," says Mr Mazza. The company operates to very fine profit margins. Mr Mazza says the key to success lies in its efficient distribution system, which is capable of making deliveries to chemists anywhere in the country at least twice a day if necessary. The firm has an annual turnover of around $1 billion, and a market share in Argentina of nearly 30 per cent.
Looking ahead, Mr Mazza also sees possibilities for the company to expand overseas. "Our long-term strategy is to implement our methods in other countries in Latin America where the distribution of pharmaceutical products suffers from the same problems, and has the same opportunities, as the Argentine market," he says. Overseas expansion has already made a significant contribution to business at the Expert group, a retail franchise chain which specialises in household appliances and domestic electrical goods. The company's shops can be found in 15 European countries, although not in Britain - at least not yet. In its home market, growth has come from a targeted approach towards marketing, with most of Expert's 550 outlets located in the suburbs of major cities. The group has made a timely acquisition of Ventura, another chain of shops which was formerly owned by a Dutch group.
Since most Ventura shops were also sited within city centres, this has allowed Expert to claim a 27 per cent share of the Argentine market. Expert president Daniel dos Reis forecasts that competition will become increasingly fierce. "The process that we now face in the field of electronics and home appliances is basically one of concentration," he says. "A few players will survive in the country." His response to this challenge is to tackle it aggressively.
"We are offering our consumers as much as possible and our services are growing very fast," he explains. Mr dos Reis is not short on ambition either and he has his eye on markets in neighbouring countries, particularly in Brazil, where he plans to open 2,000 shops. Later, he intends to take aim at Central America, the US and Canada. "And, in the future, probably Asia," he adds.