retail market overview - … · the most popular formats under spsa are: vivanda, plaza vea, plaza...

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01.2018 RETAIL MARKET OVERVIEW pagina 1 van 15

Retail Market Overview

FIT Lima

January 2018

Esthefani Lopez, Assistant Head of Office

Flanders Investment & Trade Lima Avenide Angamos Oeste, 380 Miraflores

18 Lima Peru

[email protected]

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pagina 2 van 15 RETAIL MARKET OVERVIEW 01.2018

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RETAIL MARKET OVERVIEW Publication date / January 2018

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TABLE OF CONTENTS

1. Overview ............................................................................................................................................................................... 4 2. Supermarkets ...................................................................................................................................................................... 5

2.1 Supermercados peruanos 6 2.2 CENCOSUD (centros comerciales sudamericanos) 6 2.3 Tottus 6

3. Shopping centers .............................................................................................................................................................. 7

3.1 Shopping centers in Peru 7 3.2 Shopping centers in Lima 9

4. Tenant mix ........................................................................................................................................................................... 11 5. Rental prices ...................................................................................................................................................................... 12 6. Shopping centers: consumer preferences and entry strategy .......................................................... 13 7. Sources consulted .......................................................................................................................................................... 14

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1. OVERVIEW

According to the Global Retail Development Index 20171, Latin America is a significant region for international retail expansion and Peru has positioned itself as a leading country within the region. Regarding the apparel retail sector, Peru is an attractive market for international retailers to invest. Companies such as Victorian’s Secret, Tiffany & Co and Children’s Place have already opened a store in the Peruvian market; while firms such as H&M expect to expand their presence in the market. As to the groceries retail segment, it is important to mention that the traditional channel (bodegas and

market stands) is still important in emerging markets. The following exhibit, taken from the article “Modern

grocery and the emerging-market consumer: A complicated courtship” by McKinsey2, shows the level of modern-trade development in countries around the world.

1 A.T. Kearney, Global Retail Development Index 2017, from: https://www.atkearney.com/documents/10192/12766530/The+Age+of+Focus%E2%80%93The+2017+Global+Retail+Development+Index.pdf/770c5a53-d656-4b14-bc6c-b0db5e48fdc1 2 McKinsey, Modern grocery and the emerging-market consumer: A complicated courtship , from: https://www.mckinsey.com/industries/retail/our-insights/modern-grocery-and-the-emerging-market-consumer-a-complicated-courtship

Source of information: Euromonitor International, McKinsey analysis

Modern-trade penetration and growth

https://www.mckinsey.com/industries/retail/our-insights/modern-grocery-and-the-emerging-market-consumer-a-complicated-courtship

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In Peru, the modern channel represents 30% of sales nationwide. This channel involves establishments that have a large assortment (mix) of products, present a modern infrastructure and incorporate technology into their sales processes. The modern formats are full-line supermarkets and hypermarkets, convenience stores, and discounters. In Peru, these large chains are Supermercados Peruanos, CENCOSUD and Tottus. We should also mention the convenience stores, such as Tambo, which have been a modernizing force in the food sector. Regarding retail and other commercial establishments, the number of shopping centers in Peru has increased substantially over the last years. By the end 2017, the country was expected to have 78 shopping centers. The present study focuses on two segments: supermarkets and shopping centers.

2. SUPERMARKETS

The key players in the Peruvian supermarket segment are: Tottus, Supermercados Peruanos and CENCOSUD, which compete between themselves according to the socio-economic consumer segments they target. The strong competition between these large supermarket chains is reflected in low price strategies and special offers to attract and retain more customers.

Retailer Ownership Type of outlets Total outlets

Supermercados Peruanos Peru Vivanda, Plaza Vea, Plaza Vea Super and Mass 165

CENCOSUD Chili Wong and Metro 91

Tottus Chili Tottus and Hiperbodega Precio Uno 60

Based on a study by CCR Peru3, until December 2016 the supermarkets had 224 stores located in Lima and 92 in provinces. From 2010 to 2016 the quantity of supermarkets grew considerably. While in Lima the number of open stores doubled, in provinces it tripled. In 2016, CENCOSUD opened 2 stores while Tottus opened 7. As to Supermercados Peruanos, they opened 42 stores in Lima and now have 129 commercial establishments.

3 CCR Peru, official website: http://www.ccrlatam.com/

Major Supermarket Chains by 2016

Source of information: CCR Peru

http://www.ccrlatam.com/

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2.1 SUPERMERCADOS PERUANOS

The chain was established in 2004 after the Interbank Group acquired Supermercados Santa Isabel from Dutch multinational Ahold in 2003. Supermercados Peruanos registered a net profit of S/. 4,240 million (exchange rate is 1 PEN = 3.2 USD) in 2016. SPSA’s growth is based on its aggressive strategy to open new stores and its discount campaign of “lower prices every day”.

The most popular formats under SPSA are: Vivanda, Plaza Vea, Plaza Vea Super and Mass4.

▪ Vivanda Supermarket: Targets high-income consumers, offering specialized customer-oriented service.

▪ Plaza Vea Super: Launched in 2006, it is smaller in size than the Plaza Vea hypermarket format,

specializing only in food products. The strategy is to offer affordably priced products.

▪ Plaza Vea Hypermarket: Targets middle-income consumers.

▪ MASS: Launched in 2006. It is a discount grocery store format focused on punctual, low-price and fast

purchases of a small number of items.

2.2 CENCOSUD (CENTROS COMERCIALES SUDAMERICANOS)

It is one of Latin America’s largest retailers. It acquired Corporación Wong in its entirety in December 2007. CENCOSUD has opted to keep the majority of Wong’s branding and morphed its more affordable Almacenes Eco into its “Metro” format.

Wong continues to target high-end consumers with personalized customer service and a wide variety of imported products. Metro supermarkets, targeting middle-class consumers, remain affordably priced. Metro hypermarkets are self-service, targeting price sensitive low-income customers.

2.3 TOTTUS

Tottus is part of the Saga Falabella Group (Chile). Although it is Peru’s smallest supermarket chain, with only 60 stores throughout Peru, sales per square meter are equivalent to those of CENCOSUD. The company offers the best and varied products, at low prices and with great discounts that can vary 365 days a year, all that without sacrificing quality in the products.

4 Supermercados Peruanos, Annual report 2016, from: http://www.smv.gob.pe/ConsultasP8/temp/DIA%20SPSA%202016.pdf

http://www.smv.gob.pe/ConsultasP8/temp/DIA%20SPSA%202016.pdf

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3. SHOPPING CENTERS

3.1 SHOPPING CENTERS IN PERU

In the last 5 years, the quantity of shopping centers has grown 63%. With the inauguration of Strip Center Viamix Colonial in Lima, the country is expected to have 78 shopping centers by the end of 2017. In the Peruvian market, there are 3 large groups operating malls that have more than 60% of malls (Real Plaza, Parque Arauco / Inmuebles Panamericana and Open Plaza): ▪ Parque Arauco: developer and operator of commercial real estate assets. Currently, it has 16 malls in Peru

(Megaplaza, Larcomar, Inoutlet Faucett, among others).

▪ Real Plaza: it is part of the Intercorp group and currently has 20 shopping centers.

▪ Open Plaza: it is part of the Falabella group and currently has 11 shopping centers, 4 in Lima and the

others in the cities of Piura, Chiclayo, Trujillo, Cajamarca, Huánuco, Pucallpa y Huancayo.

Supermarket Chains: Evolution

Lima

IES111

OTHER CITIES LIMA IES

316 STORES IN PERU SPSA: 165 CENCOSUD: 91 TOTTUS:60

Other cities

Source of information: CCR Peru

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Even though the first half of the year 2017 wasn’t that favorable for the Peruvian shopping center industry-specially for the ones located in the north of the country which faced the impacts of the weather phenomenon known as El Niño; by the end of 2017 this industry was expected to bill around S/. 25,953 million5, 9% more than the previous year. Likewise, this industry is expected to generate approximately 162,000 jobs. As to the average monthly visits, in 2016 visits to shopping centers reached 60.1 million per month. By the end of 2017 it is expected to grow 6%, reaching a quantity of approximately 64 million of visits. According to the Association of Shopping and Entertainment Centers of Peru (ACCEP), around 50% of Peruvians visit shopping centers and 27% of the population makes regular purchases in anchor stores.

5 Please note that the exchange rate is 1 PEN = 3.9 EUR

Indicator 2012 2013 2014 2015 2016 2017* Gross sales (S/. MM) 15,88

5

18,25

3

20,93

4

22,908 23,71

8

25,95

3

Sales growth (%) 19.6% 14.9% 14.7% 9.4% 9.3% 9%

Average monthly visits

(MM)

36.7 43.3 50.0 54.7 59.8 63.9

Leasable area (thousand

m2)

1,728 2,021 2,378 2,468 2,724

Vacancy rate (%) 4.3% 4.8% 4.2% 3.6% 2.7%

Number of shopping

centers

48 60 68 73 77 78

Number of stores 5,214 5,796 6,513 8,127 8,146

Sales evolution (millions of soles)

Average annual variation 2014-2017

7.5%

* forecast

Source of information: ACCEP

* forecast


Peruvian shopping centers: key indicators

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3.2 SHOPPING CENTERS IN LIMA

Based on the information provided by Colliers International in the 1S 2017 Research & Forecast report6, shopping centers in Lima are classified in 4 categories: Super-Regional, Regional, Community and Lifestyle. The International Association of Shopping Centers (ICSC)7 defines these 4 categories as follows:

▪ Super-Regional center: similar in concept to the regional centers, but offering more variety and assortment.

▪ Regional Center: general merchandise or fashion-oriented offerings. Typically, enclosed with inward-facing stores connected by a common walkway. Parking surrounds the outside perimeter.

▪ Community Center: general merchandise or convenience-oriented offerings. Wider range of apparel and other soft goods offerings than neighborhood centers. The center is usually configured in a straight line as a strip, or may be laid out in an L or U shape, depending on the site and design.

▪ Lifestyle: upscale national-chain specialty stores with dining and entertainment in an outdoor setting.

6 Colliers International, 1S 2017 Research & Forecast report, from: http://www.colliers.com/-/media/files/latam/peru/tkr%20retail%20-1s%202017_final.pdf 7 International Association of Shopping Centers (ICSC), official website: https://www.icsc.org/

Average annual variation 2014-2017

8.5%

Average monthly visits to shopping centers (million people)

* forecast


http://www.colliers.com/-/media/files/latam/peru/tkr%20retail%20-1s%202017_final.pdf


https://www.icsc.org/

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At the end of the first half of 2017, a total of 3,127 locations in the shopping centers of Lima and Callao were found. The total vacancy rate is 10.1% (equivalent to 315 locations), almost 1% higher than the rate with which it closed in 2016.

Category

Total stores Vacancy (stores) Vacancy rate

2S -

2016

1S - 2017 2S - 2016

1S - 2017

2S -

2016

1S - 2017

Super-Regional

center

1,442 1,462 181 182 12.6% 12.4%

Regional center 1,028 984 64 61 6.2% 6.2%

Community center 447 397 44 50 9.8% 12.6%

Lifestyle 283 284 11 22 3.9% 7.7%

Total 3,200 3,127 300 315 9.4% 10.1%

Vacancy rate within shopping centers (shopping centers in Lima and Callao)

Source of information: Colliers International


Shopping centers in Lima

Super-Regional center

1. Jockey Plaza

2. Plaza San Miguel

3. Mega Plaza Norte

4. Mall Plaza Bellavista

5. Plaza Lima Sur

6. Plaza Norte

7. Mall del Sur

1. Real Plaza Salaverry

2. Open Plaza Atocongo

3. Open Plaza Angamos

4. MAP Santa Anita

5. Real Plaza Primavera

6. Real Plaza Centro

Cívico

7. La Rambla San Borja

8. La Rambla Brasil

9. Minka

Regional center Community center

1. Caminos del Inca

2. Molina Plaza

3. Agustino Plaza

4. Real Plaza Guardia Civil

5. Real Plaza Pro

6. Real Plaza Santa Clara

1. Larcomar

2. Centro Comercial El

Polo

Lifestyle

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4. TENANT MIX

Based on the aforementioned Research & Forecast report by Colliers International, "clothing" is the theme-oriented zone with the greatest presence in terms of offer (43.3% of the tenant mix for the first half of 2017), followed by the categories "restaurants" with 14.2% and "others" with 13.8%. In 2016, these categories represented respectively the 43.9%, 13.7% and 13.6% of the tenant mix. The category "clothing" leads the mix in the Super-Regional shopping centers with a participation of 44.4%, the category "others" remains in the second position with a participation of 15.1%, followed by the category "restaurants" which participates in the mix with 14.4%. In Regional shopping centers, "clothing" is also the leading category with a participation of 40.8% of the commercial mix. The second and third categories that follow are "restaurants" and "others", with 15.3% and 13.4%, respectively. In Community shopping centers, there is greater participation of the category "clothing" in comparison to the other types of shopping centers, representing the 46.1% of the mix. This category is followed by the "personal care" with a participation of 15.5% and "others" with 11.4%.

Bars &

nightclubs 0.2%

Personal

care 9.4%

Clothing

43.3%

Home

3.2% Others

13.8%

Restaurants

14.2%

Jewelry

3.2%

Bank

4.1% Services

8.6%


Shopping centers in Lima: Tenant Mix

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5. RENTAL PRICES

In the first half of 2017, the average rental prices for locations in the shopping centers of Lima range between S/. 65 and S/. 357 per m2 per month, without considering taxes and other costs. The final rental price varies depending on several factors such as the location of the store within the mall, the attractiveness of the brand or tenant, area of the location, among others. In the Super-Regional shopping centers, the average rental price for locations has a median of S/. 162 per m2. In this category, the monthly rent price ranges between S/. 100 to S/. 357, a price to which must be added the cost of maintenance, taxes and other expenses. As to Regional shopping centers, the average rental price has a median of S/. 160 per m2 and the average price ranges between S/. 115 and S/. 195. The average rental prices in Community-type shopping centers ranges between S/. 65 and S/. 152 per m2 per month, with a median of S/. 122. With respect to the end of 2016, it can be indicated that the prices have not undergone a significant variation.


Rental prices (shopping centers per category)

Super-Regional center

Regional center

Community center

S/. p

er m

2

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6. SHOPPING CENTERS: CONSUMER PREFERENCES AND ENTRY STRATEGY

Shopping centers are not only seen as a place to go shopping but also as a place of fun and entertainment, in a family environment and with many options of consumption and distraction. People expect shopping centers to offer an entire experience that includes entertainment, leisure areas, a varied gastronomic offer and direct experience with brands. According to Arellano Marketing's shopping centers study 2017, the most preferred shopping center in Lima is Jockey Plaza. The second place is occupied by 2 shopping centers Plaza Norte and Megaplaza, while the third place is for Plaza San Miguel. As to the fourth and fifth place, we find Mall del Sur and Real Plaza Salaverry, respectively. This study also states that in cities such as Chiclayo and Piura, the favorite shopping center is Real Plaza. This last city, in addition, has the highest visit frequency in the whole country (6.8 times a month). As to cities such as Trujillo, Chimbote, Cajamarca and Arequipa; the most preferred shopping centers are Mallplaza, Megaplaza, El Quinde and Mall Aventura, respectively. In case a brand decides to enter a shopping center, it must comply with certain and high standards (technical, architectural and aesthetics) that may involve a great investment. However, the profitability that is obtained may also be interesting. Mr. Roger Evangelista8 -manager of Apoyo Publicitario- states that shopping centers' operators request stores to be designed not only under retail or visual concepts, but also technically. In the same way, the identity of the point of sale, the layout (internal distribution of spaces), the visual merchandising and its communication, will help the consumer to recognize the store. About the trends that are being seen in the malls, is that many tenants decide not only to open a store but also having an island that serves as a hook to attract more people to the store and where to place their impulse goods. It is important to mention that companies should not expect customers to enter the store, instead they should “grab them” in the corridor. To deliver the leased premises ready, previously the subject of architecture and design must have been studied, and implemented between 30 and 45 days.

8 Peru Retail, from: http://www.peru-retail.com/consejos-para-emprendedores-quieren-estar-mall/

http://www.peru-retail.com/consejos-para-emprendedores-quieren-estar-mall/

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7. SOURCES CONSULTED

1. Colliers international


2. Peru Retail

http://www.peru-retail.com/especial/conoce-principales-malls-peru-primer-semestre-2017/

http://www.peru-retail.com/inversiones-malls-peru-2018/

http://www.peru-retail.com/como-esta-desarrollando-sector-supermercados-peru/ http://www.peru-retail.com/supermercados-peruanos-consolida-como-lider-comercio-minorista-peru/ http://www.peru-retail.com/proximidad-campo-batalla-supermercados-peru/


3. International Association Of Shopping Centers (Icsc)

https://www.icsc.org/news-and-views/research/shopping-center-definitions

4. At Kearney Global Retail Development Index

https://www.atkearney.com/documents/10192/12766530/The+Age+of+Focus%E2%80%93The+2017+Global+Retail+Development+Index.pdf/770c5a53-d656-4b14-bc6c-b0db5e48fdc1

5. Mckinsey


6. Newspaper Diario Gestión

http://gestion.pe/economia/peru-lidera-desarrollo-sector-retail-america-latina-y-noveno-mundo-2177035 https://gestion.pe/economia/ano-cierra-doce-ampliaciones-malls-cuatro-nuevos-desarrollos-222167

https://gestion.pe/economia/ey-retail-peru-cerca-alcanzar-estandares-primer-mundo-221650

7. Newspaper El Comercio

https://elcomercio.pe/economia/dia-1/malls-caza-engreidos-consumidor-noticia-462345

8. Semana Económica

http://semanaeconomica.com/article/sectores-y-empresas/comercio/249836-ey-las-inversiones-en-retail-deben-ser-mucho-mas-estrategicas/

9. Equilibrium Clasificadora De Riesgo S.A.

http://www.equilibrium.com.pe/sectorialretailmar17.pdf







http://www.peru-retail.com/como-esta-desarrollando-sector-supermercados-peru/

http://www.peru-retail.com/como-esta-desarrollando-sector-supermercados-peru/

http://www.peru-retail.com/supermercados-peruanos-consolida-como-lider-comercio-minorista-peru/

http://www.peru-retail.com/supermercados-peruanos-consolida-como-lider-comercio-minorista-peru/

http://www.peru-retail.com/proximidad-campo-batalla-supermercados-peru/

http://www.peru-retail.com/proximidad-campo-batalla-supermercados-peru/









http://gestion.pe/economia/peru-lidera-desarrollo-sector-retail-america-latina-y-noveno-mundo-2177035

http://gestion.pe/economia/peru-lidera-desarrollo-sector-retail-america-latina-y-noveno-mundo-2177035

https://gestion.pe/economia/ano-cierra-doce-ampliaciones-malls-cuatro-nuevos-desarrollos-222167

https://gestion.pe/economia/ano-cierra-doce-ampliaciones-malls-cuatro-nuevos-desarrollos-222167



https://elcomercio.pe/economia/dia-1/malls-caza-engreidos-consumidor-noticia-462345



http://www.equilibrium.com.pe/sectorialretailmar17.pdf

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Disclaimer The information in this publication is provided for background information that should enable you to get a picture of the subject treated in this document. It is collected with the greatest care based on all data and documentation available at the moment of publication. Thus this publication was never intended to be the perfect and correct answer to your specific situation. Consequently it can never be considered a legal, financial or other specialized advice. Flanders Investment & Trade (FIT) accepts no liability for any errors, omissions or incompleteness, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organization mentioned. Date of publication: 01/2018

retail market overview - … · the most popular formats under spsa are: vivanda, plaza vea, plaza...

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