From bricks to clicks: Latin American retailers reap 38% value increase thanks to digital investment
Latin America’s retail sector has outperformed all other categories with a value increase of 38% compared to just 2.6% overall growth value, according to the 2020 report, BrandZ Top 50 Most Valuable Latin American Brands, published by market research firms Kantar and WPP.
“Investment in digital transformation has been key; the most valuable retailers are driving customer engagement and business value with innovative business models, including omnichannel solutions, online and mobile platforms, and digital payment systems,” write the report authors.
In Mexico, for instance, the Walmart-owned discount store, Bodega Aurrera, was the best performer overall with a 44% increase in brand value thanks in part to an aggressive expansion plan. New store openings helped the retail chain, valued at US$5.4 billion, to strengthen its distribution capabilities and physical presence in the region.
E-commerce giant Mercado Libre, meanwhile, was the highest-ranked newcomer in the report. The company, which was founded in Argentina but is incorporated in the US, is now present in around 20 Latin American countries and recently launched alternative digital payment methods including QR codes, virtual wallets and discounts available through its Mercado Pago app.
Overall, Latin American brands increased their value by 2.6%.
Although this may seem small, it is a stronger result than it first appears, according to David Roth, CEO of The Store WPP. Last year, Latin America was outperformed by three markets only - India, the US, and Indonesia - while all other regions included in the BrandZ global analysis from Europe to Australia saw either little or no growth, or shrunk.
“In this context of global political, social, and environmental uncertainty, staying still is starting to feel like getting ahead,” Roth said.
The region’s banking sector also benefited from rolling out tech-driven solutions with established banks, such as Brazil’s Bradesco and Itau, offering new services in order to compete with challenger brands from the fintech sector.
'Digital disruption is driving change'
“Digital disruption coupled with a 70% smartphone adoption rate across the region is driving change across all categories and our latest ranking shows that those brands that empower consumers to greater convenience and choice are winning,” said Oliver Pacht, managing director of Kantar’s consulting division for Mexico and Central America.
“But with the constant shift in consumer demand, brands will need to be agile in spotting the next wave of emerging consumer expectation, whilst adopting a 'humanized' approach to growth that emphasizes experience rather than products.”
Brazil also overtook Mexico as the leading country in the ranking for the first time in five years, with Brazilian brands growing over one-fifth to account for 40% of the ranking’s value.
Big beer brands dominate
While food brands were largely absent from the pan-LATAM top 50 list (Mexican bakery Grupo Bimbo was ranked at number 20 while BRF subsidiary Sadia Foods came in at number 35), beer brands dominated.
Four made it into the top 10 – Corona (Mexico), Skol (Brazil), Brahma (Brazil) and Aguila (Colombia) – and a total of 12 featured in the top 50. From Cristal in Peru to Quilmes in Argentina, every country's list of most valuable brands featured at least one beer manufacturer.
Despite the fact that beer consumption is slowing down in the region, these regional players have continued to dominate thanks to their local characteristics and branding and strong consumer-focused communication, said the analysts.
In order to compile the list, Kantar analyzed financial data from Bloomberg for publicly listed companies (or companies that publish their financial reports) originating from Argentina, Brazil, Colombia, Chile, Mexico, and Peru, and combined this with the opinions of more than 100,000 Latin American consumers.
The analyst’s view
What did Bodega Aurrera do right?
“The promise is that Bodega Aurrera is your ally in helping you take care of your family. This is achieved from two starting points: consistently low prices, and a series of tips and recommendations for home wellness through its many touchpoints, including social media.
“Unlike other retail chains that try to generate loyalty through reward programs or during specific seasons, Bodega Aurrera simply has low prices and special offers all year round. Additionally, its communication (the ‘Mamá Lucha’ – Mother Struggle mascot) is consistently used across all its campaigns, which greatly boosts its exposure and is easily identifiable and strongly linked to the brand in consumers’ minds.”
- Gabriel Castellanos, CEO of Hispanic LATAM at Kantar’s insights division.
