Brazil & Mexico: The Future of Convenience Stores in Latin America

Convenience stores (or c-stores) in Latin America have been expanding consistently in recent years. Due to shifting consumer preferences, urbanization, and the rising demand for products that can be used on the go, convenience stores are becoming more and more popular.

In Latin America, such as Brazil and Mexico, convenience stores often stock a wide range of items, such as snacks, drinks, toiletries, and other daily essentials. They are built to give customers quick access to the goods they need and are frequently seen in densely populated locations, such as metropolitan centers and residential neighborhoods. Most convenience stores in these countries are situated within gas stations, which later expanded to more accessible locations.

Brazil: Pioneering New Trends Beyond Traditional Convenience Store Formats

Proximity Stores

Consumers in Brazil still often associate c-stores with stores located within gas stations; hence, the majority of the convenience stores are establishments of well-known fuel brands, such as Ipiranga (AmPm) and Petrobras (BR Mania). 

Tailoring to the recent shift in consumer demand in Brazil is the presence of “proximity stores”, smaller convenience stores that supply food service items in addition to goods for minor purchases, top-ups, replenishments, and emergency purchases. Instead of gas stations, these stores are located near neighborhoods and workplaces, making them more accessible.

Stores of these kinds, such as Minuto Pão de Açúcar and Minimercado Extra, have extensively grown in 2019, sprouting more than 3100 stores all over Brazil. Within 3 years, the growth accounted for up to 35%, while also increasing the share of households that shop at neighborhood markets from 19% to 26,4% in the same period.

Emerging Store Formats

One of the innovations in convenience/proximity stores in Brazil that came out due to the pandemic strike was the automated stores, located within residential areas and condominiums. Inspired by Amazon Go, these stores are cashierless and enable consumers to pay through self-checkout stations, thereby limiting virus transmission through human interaction. Hirota em Casa, which is part of the Hirota supermarket chain, adopted this format and successfully expanded up to 20 stores in São Paulo.

Other store formats that also gained public traction during the pandemic were the drive-through stores by AmPm. By scanning the QR code at the forecourt to access the menu, these shops enable purchases without requiring customers to exit their vehicles. Then, mobile ordering and payment are made simple and effective, and a store employee delivers the items to the customer’s automobile.

AmPm also invented “Room Service”, which has also become popular in establishments near business districts. Menus are accessed through a QR code, while payments are made by mobile. The consumer can then decide whether they want their goods delivered to the office or picked up curbside.

Mexico: Upholding Tradition Amidst the Modern Retail Landscape

Mexican consumers living in urban areas prefer to shop at large retail supermarkets, such as Walmart, Soriana, and Chedraui. Stores for higher-end products and imports are also present and popular among these consumers.

Convenience stores started to emerge in Mexico in the 1990s. The market is dominated by Oxxo, which has expanded up to 13,000 stores, followed by 7-Eleven, Extra, and Circle K. In recent years, these stores have commonly opened in gas stations to gain a competitive advantage. Aside from offering various products and delicacies, consumers could pay their utility bills and buy cellphone airtime through these stores. Money services such as depositing, withdrawing, or paying for online purchases are also made feasible.

Tienditas: Family Business Keeps It Together

One of the most prominent store formats in Mexico are the Tienditas, local stores typically owned by local households. These stores sell a variety of staples, making them a secondary source for grocery shopping. Due to their lack of advantage in economies of scale, Tienditas products usually cost more than those of major supermarket chains. Even so, they still have an edge for smaller purchases thanks to their location in the middle of residential districts.

Tienditas also have the upper hand in product diversification. Unlike franchised convenience stores, Tienditas doesn’t have a predetermined catalog of products. This allowed them to offer products that franchised stores don’t offer, such as fresh produce, fresh-baked breads, and even fresh poultry. In addition, some tienditas even offer payment services for utility bills and online purchases, replicating franchise stores, giving customers an additional reason to visit and spend money at their stores.

One strong foundation that keeps Tienditas going amidst the competition is the ethos of running the stores as a means to sustain the family that runs them rather than profit centers. They run on a subsistence basis, with low overhead and no salaries per se. However, the number of tienditas has fallen over the last decade and is likely to continue, especially with the shifts in the younger generations’ mindset about commerce.

Overall, the pandemic had an impact by catalyzing convenience stores in Latin America. The emergence of small automated convenience stores definitely opens up opportunities for bigger chains to adapt the same technology, although regulatory barriers that might delay the process. With consumer’s demand for frictionless and practical experience, delivery and drive-thru possibilities will expand further, while loyalty and cashback schemes are more likely to be useful.

Main Photo by Daniel Velásquez on Unsplash, Ciudad de México, Ciudad de México, México

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