Posted Oct 2, 2022, 10:00 AM
Carrefour owes Atacadao the 60% increase in its turnover and profitability in Brazil in five years. The concept of cash and carry dominates the distribution of the country. It represents 29% of the consumer market, against 12% for hypermarkets. By way of comparison, in France, despite their decline, hypermarkets still account for half of French purchases.
The takeover from the Advent fund of the Big group, which controlled the former assets of Walmart in Brazil, consolidates the weight of this type of store at Carrefour. After converting its Maxxi and several hypermarkets, Big will add 90 cash and carry to the existing 250. In the land of the Cariocas and Paulistas, Atacadao generates 72% of sales and 80% of the profitability of the Carrefour Brazil subsidiary.
Informal trade
The success of cash and carry is due to the fact that it combines two forms of distribution in one: wholesale sales to professionals, operators of small independent supermarkets, restaurateurs, liberal professions and artisans… and sales to individuals. VAT and prices are the same for both customers, whereas in France the pros recover it and Metro and Promocash (owned by Carrefour) only practice what English speakers call “business to business”.
Atacadao and Assai (the Brazilian sign that Casino introduced on the Stock Exchange) feed a so-called informal trade which weighs heavily: one in three sales of consumer goods still passes through it. Prices 10% to 15% lower than those of hypermarkets appeal to individuals, rich and poor alike. They are possible thanks to the massification of purchases and larger packaging.
At Atacadao, the customer buys 5 kilo packets of rice, the professional 6 packets all at once or even a pallet, the price of which he can negotiate with the store manager. The larger the quantity, the lower the price. Atacadao does not make promotions (2% of sales) and practices low prices every day.
To obtain this mass effect with its suppliers, Atacadao limits the number of its references (9,000 against 40,000 for a hypermarket) and negotiates exclusive series. The big brands are displayed at the top of the gondola with special arrivals. Most of the shelves are supplied by the second brands on the market or sub-brands.
beer and rice
The best-sellers everywhere are beers and food commodities from Brazil – rice, flour and oil -, explains Marco Oliveira, the general manager who participated in the acquisition of Atacadao from its founders in 2007 for 825 million euros. euros. The stores benefit from covered parking, a bay window open onto the sales area and impeccable maintenance which denotes the received idea of a dusty wholesaler. “It’s so clean that one day, during an opening, the director spread a little flour on the floor of the aisles to give the impression that there was a lot of activity,” says the manager.
The objective is to maintain the rhythm of twenty openings per year to reach a stock of 500 units. The formula works as well – and even better – in middle-class residential areas, where a store can exceed 80 million euros in turnover, as near the favelas where, with the same size, sales will be around sixty million. In both cases, the Ebitda margin reaches or exceeds 7%. As Bernardo Trujillo – who taught distribution to Europeans for the National Cash Register in the 1960s – said, “the poor like low prices, the rich love them”.
