In 1995, Walmart, the American retail giant, stepped into Brazil. It was a journey full of highs and lows, and it is somehow a cautionary tale for brands entering an emerging market like Brazil.
The first phase for Walmart was to slowly open new stores across the country. But when Brazil’s economic boom started in the early noughties, the retailer embarked on a spending spree, acquiring local supermarket chains and expanding beyond Sao Paulo and Rio de Janeiro.
Walmart’s first mistake was to focus too much on store expansion rather than the Brazilian consumer.
Their “Everyday Low Prices” strategy, a big win in the United States, didn’t really click with Brazilian shoppers who love a good promotion. Plus, Walmart’s huge hypermarkets, often on city outskirts, didn’t fit with the growing trend for handy local markets.
On top of that, the grocery retail sector in Brazil is extremely competitive and fragmented, with other well-known international companies, such as Carrefour, and Brazilian companies like GPA, holding a considerable percentage of the supermarket/hypermarket sector.
The Comeback Attempt: Walmart’s Strategic Shift (2014 – 2019)
The economic crisis in 2015 and 2016 made things even harder for Walmart, with profits going down and margins getting tighter as Brazilian attitudes to shopping started to change.
In the mid to late 2010’s, a new trend of grocery shopping emerged in the country: Brazilians started to flock to Cash and Carry stores. Originally these types of stores would serve only small and medium foodservice businesses, but now Brazilian families were shopping there too.
Cash-and-carry stores, or “Atacarejos”, as they are known in Brazil, usually charge two prices for the same product: cheaper for those who want volume (wholesale) and more expensive for those who buy less (retail). And the savings are very attractive for Brazilian families that are on average larger.
Seeing the success of this new trend, supermarket chains started to invest in cash-and-carry chains: Carrefour bought the chain Atacadão and Walmart acquired Maxxi.
Walmart Rebrands To BIG (2019 – 2021)
In 2018, Walmart tried to turn things around. They did a major rebranding and sold part of the company to a private equity firm called Advent International, but kept a 20% stake. They swapped the Walmart name for Grupo BIG, hoping to reconnect with shoppers who liked local brands like BIG (hypermarket format) and BIG Bompreço (smaller grocery stores).
In a surprising move, Walmart stopped selling online in Brazil in May 2019, choosing to focus on their physical stores and Cash and Carry Maxxi stores.
The rebranding also meant a lot of changes for their physical stores. About 100 stores that used to be Walmart were renamed to BIG and BIG Bompreço. Plus, 27 Walmart stores were switched to the Maxxi and Sam’s Club, focusing on the cash-and-carry retail model.
By June 2020, the Walmart name was completely gone from Brazilian supermarkets. The company, now known as Grupo BIG, announced plans to open ten new Sam’s Club stores by August 2020 and invest 1.2 billion reais in its stores over the next 18 months.
Carrefour’s Strategic Acquisition: The Buy-Out of Grupo BIG
In 2021, Carrefour Brasil bought Grupo BIG, helping Carrefour grow especially in the South and Northeast of Brazil. The Maxxi stores were switched to Atacadão, and the BIG and BIG Bompreço stores were rebranded to either Atacadão or Carrefour hypermarkets.
Grupo BIG currently has 41,000 employees and it’s present in 19 Brazilian states, and registered R$ 24.9 billion (around USD $ 4.5 billion) in gross sales in 2020. The merger with Carrefour will create a group with gross sales of around R$ 100 billion (USD $ 20 billion) and approximately 137,000 employees, consolidating Carrefour’s top position in grocery retail in Brazil.
“Our group has gone on the offensive,” announced the company’s global CEO, Alexandre Bompard, highlighting that the operation is part of the group’s international growth strategy, based on “consolidating presence in key markets”, like Brazil, where Carrefour has been present since 1975.
“We have increased our leadership in the grocery retail sector t in this country, which has immense development prospects,” said Bompard.
In a recent interview, Caio Megale, CEO of Carrefour Brasil said: “This acquisition is a major milestone for Carrefour in Brazil. It will allow us to strengthen our position as the leading retailer in the country and better serve our customers.”
To wrap it up, Walmart’s journey in Brazil has been a wild ride, from fast expansion, major changes to eventually disappearing from Brazil. The company’s experience is a great lesson for international retailers trying to make it in the complex and ever-changing Brazilian grocery sector.
Main photo: Brazilian Supermarket, via wikimedia commons