The notable withdrawal of consumption, lack of long-term financing at reasonable prices and the migration of consumers to other commercial channels combine so that the big chains of hypermarkets are already anticipating that they will suffer an end of the year with a crisis much deeper. that what has come has been suffered since 2016.
The scenario is set to worse than 2018 worse than it started and is even more complicated than those that went through the second half of 2017. Neither the current tranquility of the dollar nor the financial tranquility that gave the agreement with the IMF the economy or the new increases in wages Expected after the reopening of some paritarias they seem to convince entrepreneurs of the envelope of the arrival of a quieter and more stable landscape with a reactivation horizon.
The last quarter is considered fundamental for hyper and supermarkets, since between October and December they tend to concentrate the largest sales of clothing, footwear, toys and licensed products. Especially, from the end of Christmas and New Year holidays.
They are elements that could offset the strong drop in sales of food that has been evident every month, despite the innumerable amount of offers, promotions, discounts and discounts linked to electronic commerce, such as the last Cyber Monday or Friday black .
The pessimistic scenario is admitted by the sources of the main chains in the sector, which do not expect to close 2018 with better data and that they anticipate that, at least, the first half of 2019 will continue in the same way of retraction and recession.
In fact, they admit that parent companies will return funds to their Argentine subsidiaries, as they did last year, when the monetary crisis, the process of recession and inflation strongly impacted this business. To the point they had to admit in their power plants they lost money for the first time in almost 17 years.
Since the 2001 census does not close the balances in red as anticipated, it will again happen in this exercise, which will have a low profitability level and even lower than 2016, which is 1%.
Far from improving, his situation worsened further during the first half of this year. He acknowledges that the process of depletion of personnel and industry continues to be able to adapt their structures to this reality and to try to compete with wholesalers, convenience stores and Asian stores, which are concentrating the demand of customers who move away from Walmart Gndolas , Carrefour, Jumbo, Disco or Vea.
A year of numbers in red
Until August, four months were viable for these chains and the other four were red. The positive ones were February, March, May and June, which, according to INDEC statistics, posted sales growth of 1.7%, 9.5%, 3.2% and 4.8% respectively, and in comparison with the same months as in 2017
The rest of the months showed worrying figures: January, with -2.7%; April, with -2.3%; July, -2.9% and August with -4.2%. It is assumed that the remaining months will keep this pessimistic outlook, although the annual cumulative reflects stagnant revenue, with a slight increase of 0.8% compared to the first eight months of last year.
In volume, sales at constant prices amount to 215,036 million dollars compared to 213,331 million dollars in the same period of 2017, which is the strong retraction that official statistics do and taking into account that inflation accumulated in the same period exceeds 24%.
In fact, if the data is compared to current prices, another scenario, with an increase of 26% in August and 24% in the first eight months, with sales amounting to $ 287,356 million compared to 230.252 million dollars last year .
Regarding forms of payment, the cards have already outgrown the money, mostly because of the possibility of availing the discounts, promotions and fees offered by plastic money transmitters. Last August, for example, sales with debit and credit cards accounted for 58.5% of the total, compared to 34.9% of cash and 6.5% of other means. Average purchases per consumer does not exceed $ 400.
Regarding the personnel, each of the 2% is shown in respect to the same lapse of 2017: 99,236 employees, between hierarchical positions, boxes, administrators and repositors. By the work of the participants, the chains have seen their labor cost increase 19%, which reinforces the prospects of continuing to diminish the workers as a way of reducing their structures to a worrying reality.
The cultural change of the low cost customer
The factors that complicate the end of the year have to do with the recession, the lack of fixed rates and the decision of our clients to look for other channels of purchase. In addition, with the choice of cheaper products, such as those of the second brand and own brands, admits a director of one of the largest supermarket chains in the country, which requests the displacement due to the sensitivity of the situation.
His words find support in a work by consultant Kantar Worldpanel, indicating that the local retail sector has initiated a phase of reconversion -nedified and expected- with the aim of adapting to the new customer buying habits. Even, it reveals that mass consumption in Argentina has more than a decade of stagnation and ensures that today it has the same volume of purchases as in 2007.
"If the total market does not grow, the only positive evolution is to overcome competition, in this case, to other shopping channels," says Kantar's report, which shows that retailers and smaller stores have improved. The task of hypermarkets when it comes to attracting consumers.
There are also speakers of "low cost" customers. That is, those looking for second-line brands, run after the deals, compare prices and, above all, choose the channel that is perceived as the cheapest, where the merchant wins the battle.
In addition, mass consumption has lost relevance at all levels of the social pyramid. For example, high and middle strata prioritize tourism, durable goods, savings; while the low levels are obliged, given the impact of adjustment in public services and inflation.
"We interpreted that the supermarkets read the changes of habits of the last years as temporary and not like a new normality, that understood from the wholesale point of sale as temporary and lost the battle of the perception of the prices, assure the work like critic to the strategy Commercial adopted by the chains to survive the current crisis.
According to Kantar, 90% of households consider that the wholesale channel is at least 15% cheaper than hypermarkets, a belief that will be very difficult to reverse in the short term.
"Hypermarkets have focused their efforts on the increasingly aggressive activation of promotions, decreasing their profitability, proving that they lose their effect over time, which the consumer usually creates and only generates additional sales if they grow in quantity, aggravating the problem." add the report
In 2017, some merchants encouraged them to return to the bases and began to communicate low prices always, competing with what the consumer values the merchant.
Another issue of hper is based on the low innovation, with a low development of electronic commerce in mass consumption that only represents 0.5% of the total. "The outcome of the current context will be a complex sum of small parties, difficult to articulate and time-consuming, we must wait for the sector to continue in the conversion, perhaps with mergers, acquisitions and new emerging players," Kantar encourages support. way of conclusion
The chains know that by the end of the year "they will not be good", since they recognize him by another of the great players of the field that, in addition, they already resign to have to be supported with funds from their headquarters, in this case, located in Europe
"We expect a lower profitability than last year, with a perspective for 2019 that could only recover from the second half," argue in another chain with an American accent. Although they are still not sure they will receive monetary assistance from their headquarters, they admit that for several years they have not obtained gains in the coffers of their parent company. "So far, we operate with the small margin we have, but the truth is that we do not know how long we can do it," they warn.
The sources consulted by iProfesional agree at one point: the business cake will continue to decline in favor of wholesalers and local businesses. "Customers continue to move from the modern channel and return to the traditional, to the neighborhood store, to the merchant, as they can offer other prices, more differences in not having to withstand so much fiscal pressure as we do," indicates a benchmark in the sector.
Therefore, we anticipate that next year should continue to ease the ingenuity to avoid the deepening of the crisis that has already supported or copied the strategy adopted by Carrefour to appear before the Government requesting the opening of a preventive procedure of crisis that allowed him to close some branches and dismiss to the staff.
Rami Baitieh, who replaced Daniel Fernndez as Executive Director, should lead the reconversion of 16 hypermarkets in the Maxi markets to tackle wholesale supermarkets more directly. This is a format that last year gave the hypermarket the battle for customers, leveraged in small sales areas, lower costs and lower prices.
In the case of Walmart, it also reduced its structure, although it used another way to close directly the Dot shopping port and sell a dozen stores of its smallest format to Da chain.
Disco, See and Supervea, owned by the Chilean group Cencosud, also fed their funds in the neighboring country as a way to avoid or delay the election of a path to balance similar to that of its competitors. "There will certainly be some of this next year if the business continues to decline," warned Horst Paulmann, the owner of Cencosud.
They also expect the market to maintain commercial formulas that combine offers, discounts and quotas in some days of the week, with limited price increases that do not compensate for rising costs and inflation. "If we do, we sell much less than now," they say as a justification.
With these data and warnings at sight, it is only expected that the supermarket sector has the obligation to continue on the way to the drain, the dismissal of the personnel and the brake of any type of expansion plan, at least during the next two years.
Additionally, they should expand the offers of discounts, deals and agreements with credit card issuers to extend quotas and discounts to those who purchase with plastic money.
Both Carrefour and Walmart will also permanently apply their usual strategies with which they try not to recover, but to keep customers, make money and try not to depend on the capital quotas of their headquarters abroad.
Volvern returns efforts with occasional discounts almost every day, discounts on the use of certain credit or affinity cards and offers for the quantity of purchased products (such as traditional 4×2 or 6×4).