The arrival of COVID-19 significantly changed purchasing behavior in Latin America, driving the highest volume growth seen in 10 years during the first quarter of 2020. Buyers around the world during this period were purchasing more consumer goods, sourcing certain types of products, while preparing for insulation and potential supply shortages. This resulted in total volume growth in the region of 4.8%. In Brazil and Mexico, the pandemic reinforced an existing trend of volume growth, while in Argentina and Chile the declines seen at the end of 2019 were reversed.
Lenita Vargas, Latam Retail director of Kantar’s Worldpanel Division explained: “There are differences in the channel structure in the region and in the movements due to the pandemic, for example, at the beginning of the quarantine people started to make more supply purchases and larger store formats grew. As isolation restrictions were imposed, proximity channels began to stand out. In countries where there were more flexible, or regional, actions, the Hypermarkets/Supermarkets and Wholesalers continued to grow driven by larger purchases.
Therefore, in the case of Peru it was observed that during the quarantine the traditional channel, formed by market stores, had a good development, since they went from 31% of importance in value, in the first quarter of the year to 39% in April, this means that the proximity of the points of sale during the first months of isolation was fundamental for the consumer.
On the other hand, Hypermarkets and Supermarkets were more developed in Chile. Here we speak of a growth of 5 percentage points in the importance in value of this format, which went from 53% during the first quarter to 58% in April.
“The big highlight of this pandemic was the acceleration in the trend of digital shopping, which has gained new buyers. In addition, shoppers are beginning to increase their spending on this channel. In the case of Argentinean shoppers, they spent 31% of their spending during May, whereas in the quarter from March to May last year it was only 8%, so we can say that they are gaining some loyalty to this way of shopping,” added Lenita Vargas of Kantar.
Continuing with the development of E-commerce, we have seen an evolution that occurs month to month in the region, and it is mainly the big cities that are driving the trend today. In the case of Brazil, e-commerce reached a penetration of 8.8% in the mobile year as of June this year and if you look at the detail, in the city of São Paulo it is 17%, or twice the country’s average.
Therefore, it can be said that during COVID-19 there were growth engines and this increase in the value of mass consumer goods is attributed to four key trends:
- 1- Storage before quarantine: At the beginning, it was inevitable to bring carts full of additional items due to traffic restrictions and possible isolation. In Latin America, after storage, the frequency decreased and purchases were greater, increasing the importance of supply missions.
- 2- Consumption outside the home is transferred to the home: Bars, fast food chains and restaurants were the most impacted channels, directly reflecting the performance of Ready-to-eat Foods and Beer. InBrazil, the largest retraction occurred in the last week of March. Lunch and afternoon snacks were the main consumption moments that contributed negatively, which was reflected in an increase of + 27% in new occasions at home for Food and Beverages.
- 3- New occasions outside the central moments. With most people working from home and children out of school, an increase in feeding times within the home was observed. InMexico, they segmented 8.1% more occasions for eating, mainly due to people snacking between main meals, as they crave pleasure and “stimulating” moments throughout the day; these occasions increased by 3%. There was also a renewed focus on certain times of the day.
For example, without the morning rush, families have spent more time preparing and eating breakfast together. In Mexico, people have spent 5.5% more time in the kitchen making breakfast, 1.4% more time making lunch, and 2.2% more time cooking dinner. In Colombia, 90% say they are eating healthier and 61% are trying out new recipes at home.
- 4- Greater attention to health and hygiene: The constant flow of advice established by the health authorities during the pandemic has led to an increase in sales of hygiene and health-related products.
In the end, we see that Latin American consumers are adapting to the way they buy and live at home, learning to enjoy family moments due to the impact of COVID-19 and changing their habits in order to cope with quarantine.
Author: America Retail