Winners and Losers: Brazil’s convenience store battle

Brazil is notoriously difficult for doing business, as I mentioned on many of my previous posts. And yet some brands still manage to grow and be successful there while others fail dismally.

The case of 7-Eleven vs. AM/PM

7-Eleven is one of the most successful convenience store chain worldwide – from North America to Asia and Europe. But its story in Brazil wasn’t a successful one. The chain opened in Brazil in the early 1990’s, reached 17 stores in Sao Paulo and closed its operations after less than ten years.

An article published on news portal Exame in 2002 says its exit was because of intense competition. Also convenience stores had to change their business model and today are only found attached to petrol stations.

However, I think there were other reasons: some might say that economic moment wasn’t good in Brazil – it was before the country’s economic growth – but I think the main reason was the lack of brand positioning and here is why:

7-Eleven didn’t seem to have a specify public to target, either in gender, age or socio economic class. There was no clear appeal in terms of price or product even with the convenient 24hr opening times. Despite of Brazilians having a predilection for ‘Americanized’ food, no-one went to shop there.

Despite of Brazilians having a predilection for ‘Americanized’ food, no-one went to shop there.

Now, let’s take a look at the highly successful convenience store chain AM/PM – like 7-Eleven it started its operations in Brazil in 1991 as a stand alone store attached to Ipiranga petrol stations.

25 years later, it has 360 total stores nationwide and 196 only in Sao Paulo city. It also counts with more than 110 own brand products, from sandwiches, energy drinks to sodas and candies.

According to a consumer research by Ipiranga in 2015, 45% of customers that shopped at AM/PM, didn’t purchase petrol – meaning that nearly half of customers went there only to buy the store’s products. The same study shows thatAM/PM targets a higher socio economic class, with 23% of their customers from the socio economic class A and 17% from B – which would be an equivalent to say they are from an upper middle class.

The chain also offers a breakfast bar and the latest addition to its stores was the ‘Beer Cave’, stocked with a wide range of Brazilian and international beers. Indeed, there are aiming to provide a ‘one-stop shop’ experience, taking the idea of ‘convenience’ to a next level. And its store’s layout (photo below) are more similar to a Brazilian bakery (padaria in Portuguese) rather than an ‘Americanized’  store type.

On top of that, AM/PM offers a loyalty program – a points programme to build a relationship with their customers, and giving their figures, it seems to be paying off.

This only comes to prove that even in a place like Brazil, with less than positive economic outlook, a retail brand can grow and thrive. I’m talking about a very niche market here, such as convenience stores, but brand positioning is vital in any level or market – a clear brand strategy is crucial, even more so in times of crisis.