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Small Format Grocery Stores - Brazil - February 2014

“In Brazil, small format grocery retailing, which consists of gas station convenience stores, minimarkets, and bakeries, has a strong convenience positioning. Retailers can succeed in the segment through outlets that are well-located, with good presentation and a limited range of products of good quality and price.”

– Jean Manuel Gonçalves da Silva, Senior Food Analyst

This report will discuss the following questions:

  • What are the main characteristics of the small format grocery store segment and the operators?
  • How do consumers perceive the small format grocery store channel in Brazil and what are their expectations of it?
  • How can gas station convenience stores increase shopping frequency among Brazilians?
  • Which aspects of the stores and their product offerings can attract more local shoppers to convenience stores and minimarkets?
  • How can strategies targeting the female public have a positive impact on increasing shopping frequency in convenience retail?

Small format grocery retailing in Brazil is broad and consists of gas station convenience stores as well as other channels not formally designated “convenience,” such as minimarkets and bakeries. The latter is the channel most frequented by Brazilians. This is traditionally driven by purchasing fresh bread, facilitating the purchase of other food items for home, as well as snacks.

Minimarkets also enjoy substantial market penetration among shoppers. Characterized by a large presence of independent establishments, the minimarket segment is now seeing minimarket chains such as Dia% and Minimercado Extra expand rapidly, demonstrating the potential of leading chains in the segment.

Gas station convenience stores are the convenience channel with the lowest market penetration among shoppers. While Brazil’s largest gas station brands are present in the segment, the store number remains low at just 6,904.

Store brands could be well-placed to tap into the high importance of quality and price to shoppers even in the convenience channel. Dia%, for example, already operates in Brazil with a product offering that consists of 30% of store brands. Furthermore, small format grocery store chains could take advantage of their stricter standards for tidiness to appeal to the more than half of the small format grocery store shoppers concerned about these aspects.

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Table of contents

  1. Introduction

      • Terms
        • Bakeries
          • Minimarkets
            • Convenience stores
              • Small format grocery stores
              • Executive Summary

                  • The market
                    • Figure 1: Share of channels in Brazil’s small format grocery retail, according to number of establishments, 2012
                  • The consumer
                    • Figure 2: Shopping frequency at bakeries, minimarkets, and convenience stores, October 2013
                  • Report topics
                    • Marked scope remains for gas station convenience stores to expand
                      • Figure 3: Shopping in bakeries, minimarkets, and convenience stores, October 2013
                    • Quality, organization, and price are critical success factors in small format grocery stores
                      • Figure 4: Selected factors deterring shoppers from using the nearest shop, October 2013
                    • Women can help increase usage of convenience stores
                      • Figure 5: Agreement with the statement “I make a list of the things I need before going to the supermarket,” by gender, November 2012
                    • What we think
                    • The Market

                      • Key points
                        • The number of gas station convenience stores is growing, but the segment is still relatively small
                          • Figure 6: Small format grocery store in Brazil, by number of establishments, 2008-12
                        • Bakeries are key establishments in the small format grocery stores landscape
                          • Figure 7: Usage of selected breads and baked goods at least once a day, April 2013
                        • Branded minimarkets are adapting their business model to the Brazilian market, but independent establishments still dominate
                          • Econ
                            • Dia%
                              • Minimercado Extra
                                • Todo Dia (Wal-Mart)
                                • The Consumer – Frequency of Usage of Small Format Grocery Stores

                                  • Key points
                                    • Gas station convenience stores
                                      • Low store numbers and car ownership dampen usage
                                        • Figure 8: Shopping frequency at bakeries, minimarkets, and convenience stores, October 2013
                                      • Driving more frequent visits remains a key challenge
                                        • Bakeries
                                          • Minimarkets
                                          • The Consumer – Factors Deterring Shoppers from Using the Nearest Shop

                                            • Key points
                                              • Prices and untidiness are key barriers to usage of nearest store
                                                • Figure 9: Factors deterring shoppers from using the nearest shop, October 2013
                                              • Price is a core consideration in choice of store
                                                • Quality matters for nearly half of shoppers
                                                  • Tidiness is high and services low on the list of considerations
                                                    • Payment methods are of little interest to consumers
                                                      • Product offering
                                                      • The Consumer – Attitudes toward Convenience Stores, Bakeries, and Minimarkets

                                                        • Key points
                                                          • Wide range of products and fresh bread attract consumers to bakeries
                                                            • Figure 10: Attitudes toward convenience stores, bakeries, and minimarkets, October 2013
                                                          • Many shoppers are open to bakeries offering wider ranges
                                                            • Minimarkets cater beyond top-up shopping
                                                              • Minimarkets lag behind on personal service
                                                              • The Consumer – Further Attitudes toward Convenience Stores, Bakeries, and Minimarkets

                                                                • Key points
                                                                  • Interest in healthy options of baked goods stands out
                                                                    • Figure 11: Attitudes toward convenience stores, bakeries, and minimarkets, October 2013
                                                                  • Healthy bread could help minimarkets steal a march from bakeries
                                                                    • Limited interest in delivery services
                                                                      • Joint promotions at gas stations to drive trial
                                                                      • Marked Scope Remains for Gas Station Convenience Stores to Expand

                                                                        • Key points
                                                                          • Access to convenience stores is limited to gas stations
                                                                            • Figure 12: Shopping in bakeries, minimarkets, and convenience stores, October 2013
                                                                            • Figure 13: Total number of passenger cars in use, in selected countries, 2011
                                                                          • Bakeries and minimarkets are numerous and also offer convenience
                                                                            • Figure 14: Consumption at least once a day of selected breads, April 2013
                                                                            • Figure 15: Food retail in Brazil by segment, by share of outlets, 2011
                                                                          • Franchise and “shop in shop” model can position convenience chains in established outlets
                                                                            • Highlighting the shopping experience could help chains forge an edge over the independents
                                                                              • Figure 16: General thoughts on convenience stores, bakeries, and minimarkets, October 2013
                                                                            • What it means
                                                                            • Quality, Organization, and Price are Critical Success Factors in Small Format Grocery Stores

                                                                              • Key points
                                                                                • Tidiness is important for small format grocery store shoppers
                                                                                  • Figure 17: Selected factors deterring shoppers from using the nearest shop, October 2013
                                                                                • Wide ranges of products and brands are not very important factors for most small format grocery shoppers
                                                                                  • Figure 18: Factors deterring shoppers from using the nearest shop, October 2013
                                                                                  • Figure 19: Factors deterring shoppers from using the nearest shop, “high prices,” by socioeconomic group, October 2013
                                                                                • What it means
                                                                                • Women Can Help Increase Usage of Convenience Stores

                                                                                  • Key points
                                                                                    • Women shop less at gas station convenience stores than men
                                                                                      • Figure 20: Convenience store shopping, by gender, October 2013
                                                                                      • Figure 21: Agreement with the statement “I make a list of the things I need before going to the supermarket,” by gender, November 2012
                                                                                      • Figure 22: Establishment near home where you shopped in the last 12 months, by gender, October 2013
                                                                                    • Various strategies can attract women to the convenience stores
                                                                                      • Offering automotive services to women
                                                                                        • Offering products that women purchase most often
                                                                                          • What it means
                                                                                          • Appendix – Consumer

                                                                                            • Frequency of usage of convenience and small format stores
                                                                                              • Figure 23: Frequency of shopping in bakeries, minimarkets, and convenience stores, October 2013
                                                                                              • Figure 24: Most frequent frequency of shopping in bakeries, by demographics, October 2013
                                                                                              • Figure 25: Next most frequent frequency of shopping in bakeries, by demographics, October 2013
                                                                                              • Figure 26: Highest frequency of shopping in minimarkets, by demographics, October 2013
                                                                                              • Figure 27: Next highest frequency of shopping in minimarkets, by demographics, October 2013
                                                                                              • Figure 28: Highest frequency of shopping in convenience stores, by demographics, October 2013
                                                                                              • Figure 29: Next highest frequency of shopping in convenience stores, by demographics, October 2013
                                                                                            • Factors deterring shoppers from using the nearest shop
                                                                                              • Figure 30: Factors deterring shoppers from using the nearest shop, October 2013
                                                                                              • Figure 31: Most popular factors deterring shoppers from using the nearest shop, by demographics, October 2013
                                                                                              • Figure 32: Next most popular factors deterring shoppers from using the nearest shop, by demographics, October 2013
                                                                                              • Figure 33: Other factors deterring shoppers from using the nearest shop, by demographics, October 2013
                                                                                              • Figure 34: Least popular factors deterring shoppers from using the nearest shop, by demographics, October 2013
                                                                                            • Attitudes toward convenience stores, bakeries, and minimarkets
                                                                                              • Figure 35: General thoughts on convenience stores, bakeries, and minimarkets, October 2013
                                                                                              • Figure 36: Most popular general thoughts on convenience stores, bakeries, and minimarkets, by demographics, October 2013
                                                                                              • Figure 37: Next most popular general thoughts on convenience stores, bakeries, and minimarkets, by demographics, October 2013
                                                                                            • Further attitudes toward convenience stores, bakeries, and minimarkets
                                                                                              • Figure 38: General attitudes toward convenience stores, bakeries, and minimarkets, October 2013
                                                                                              • Figure 39: Most popular general attitudes toward convenience stores, bakeries, and minimarkets, by demographics, October 2013
                                                                                              • Figure 40: Next most popular general attitudes toward convenience stores, bakeries, and minimarkets, by demographics, October 2013

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                                                                                          Small Format Grocery Stores - Brazil - February 2014

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