In the consumer industry, the sales channels are diverse and each type of store plays a specific role in defining the distribution and sale strategy. A correct retail classification of existing stores in a country is key to developing an optimal Route to Market (RTM) strategy, the definition of the ideal assortment by channel and store, the definition of the trade marketing strategy and budget by commercial channel, and even the development of programs relationship and customer incentives by channel.
Here we describe a typical retail classification of mass consumption stores in Latin America.
Hypermarkets
They are even larger than supermarkets and offer a more extensive range of products, including appliances, clothing, other household items, and a full selection of food products.
Size: They are the largest, with surfaces that often exceed 2,500 square meters, reaching 10,000 square meters or more.
Variety of products: They offer a wide range of products that not only include food and beverages, but also appliances, clothing, electronics, and household items. The offer is extensive in almost all product categories.
Additional services: Hypermarkets often include services such as cafeterias, food courts, banks, pharmacies, and ample parking. Its focus is on providing a comprehensive shopping experience where the consumer can purchase all the necessary products in one place.
Originally from France, Carrefour is one of the largest and most well-known hypermarkets in the world. It offers a wide variety of products including food, electronics, clothing and household items. In addition, many of its locations include additional services such as gas stations, banks and pharmacies.
Discount stores (Hard Discount)
The concept of "hard discount" refers to a type of retail store that focuses on offering extremely low prices on a limited range of products, often private label or lesser-known brands. This business model is based on reducing operating costs and simplifying operations in order to offer lower prices than traditional supermarkets and stores, often because products are close to their expiration date, are in excess stock or have damaged packaging.
Limited Product Variety: They offer a limited assortment of items, often between 1,000 and 2,000 SKUs (stock-keeping units), compared to the 20,000 to 30,000 SKUs that can be found in traditional supermarkets.
Private Label: Much of the inventory consists of private label or exclusive brands, which helps keep prices low.
Smaller Store Format: Stores are generally smaller than conventional supermarkets and are simply designed, with minimalist decor and basic shelving.
Pricing Strategy: They focus on offering the lowest possible prices, sacrificing the variety and presentation of the products.
Reduced Service: They minimize service costs, offering fewer employees per store and fewer additional services.
Aldi is a classic example of a hard discount chain originating in Germany. Aldi focuses on keeping operating costs low and offers a limited selection of products, mostly private or exclusive brands. Their stores are smaller and with very basic decoration, focused on offering low prices.
Discount Clubs / Wholesale
They are large establishments that sell products in high-volume formats or in multiple packages, generally at reduced prices. They are aimed at both consumers who want to save by purchasing in large quantities and small businesses and restaurants.
A prominent example of a discount club is Costco , based in the United States. Costco operates under a membership model and specializes in selling products in large quantities and in bulk, often at very competitive prices. In addition to food and everyday consumer products, Costco also sells electronics, furniture and jewelry, among others.
Supermarkets
They are large establishments that offer a wide variety of food and non-food products. Supermarkets usually include sections for fresh, frozen, packaged products, as well as hygiene and cleaning products.
Size: Generally, supermarkets are smaller in size than hypermarkets, ranging between 400 and 2,500 square meters.
Variety of products: Although they also offer a variety of products, supermarkets focus more on food, drinks and everyday products, including cleaning and personal care products. The selection of non-food products is more limited compared to hypermarkets.
Additional services: They may include some additional services such as pharmacies or lottery outlets, but to a lesser extent than hypermarkets. Their focus is on convenience and accessibility for daily or weekly shopping.
In the United States, Kroger is a typical example of a supermarket. It offers a wide range of products, from fresh and packaged foods to pharmaceutical products. Its stores are medium in size and are designed to provide a complete but more localized shopping experience than a hypermarket.
Minimarkets
Minimarkets or larger convenience stores occupy an intermediate place between supermarkets and grocery stores or neighborhood stores in terms of size, variety of products and services offered. Mini markets are ideal for consumers who are looking for more variety than what a grocery store can offer without the need to go to a larger supermarket. Their size and offering make them convenient for everyday or small purchases, and they are strategically located to serve specific communities with accessibility and extended hours.
Size: Mini markets usually have a size that varies between 100 and 400 square meters. They are larger than a supermarket but smaller than most supermarkets.
Variety of products: They offer a wider selection than grocery stores, including a reasonable variety of foods, drinks, personal hygiene and cleaning products, but without reaching the diversity or quantity that supermarkets handle.
They often have a limited fresh produce section such as fruits, vegetables, and sometimes meats and dairy.
Additional services: They can offer some basic services such as mobile phone recharging, sale of public transport cards or even small cafes or fast food areas.
They are typically located in residential areas or near offices, offering convenience for quick purchases or outside of typical business hours.
In Costa Rica, a good example of a minimarket is the AMPM chain. This type of establishment combines the characteristics of a convenience store with some elements of a small supermarket, offering a practical and quick solution for daily or emergent purchases.
Open markets or fairs
These markets can be daily or weekly and are usually outdoors or in semi-permanent structures. They offer fresh products directly from producers, including fruits, vegetables, meats, and dairy products.
Supplies or Neighborhood Stores
The term "supply", "bodega" or "neighborhood store" refers to small commercial establishments that sell essential products for daily consumption, such as food, drinks and some personal hygiene and cleaning items. These stores are typically operated by individuals or families and are located within residential communities, providing quick access for every day or last-minute purchases.
Size: Supplies are much smaller, generally less than 400 square meters, often not exceeding 100 square meters.
Variety of products: Its offer is mainly limited to essential and rapidly consumed products, such as basic foods, beverages, and some cleaning and personal care products. They do not usually have a wide range of brands or specialized products.
Additional services: Supplies generally do not offer additional services. Its main advantage is proximity and convenience for quick or last-minute purchases.
Throughout Latin America, this type of store is usually called by different names such as Almacenes (Argentina, Uruguay, Chile), Abarrotes or Changarros (Mexico), and PulperÃa (Central America).
Convenience stores
They are smaller stores than supermarkets, often located at gas stations or in dense urban areas, and are designed for quick and convenient shopping. These stores are usually open for longer hours than traditional supermarkets, offering a limited range of fast-moving products.
7-Eleven is best known as a convenience store that in many locations operates out of service and fuel stations, offering a variety of basic foods, beverages, and other essential products, along with additional services such as ticket sales, payment of bills and phone recharges.
Specialized stores
They include bakeries, butcher shops, cheese shops, and others that specialize in a particular type of product. These stores offer high-quality products that are often locally produced or artisanal.
Organic and health food stores
Specializing in organic, natural, ecological, sustainable products free of chemical additives, these stores attract a segment of consumers concerned about health, well-being, and environmental sustainability.
e-commerce
It includes marketplaces, online supermarkets, and food delivery services that allow consumers to make their purchases from home and have them delivered to their doorstep. This modality has gained popularity and expanded rapidly in recent years.
Conclusion
In conclusion, the correct classification of stores in the mass consumption industry is essential to maximize the efficiency and effectiveness of commercial operations. By understanding and differentiating the various types of stores, companies can tailor their products, marketing, and distribution strategies more precisely for each channel. This not only optimizes inventory management and logistics but also improves the consumer's purchasing experience, strengthens business relationships, and increases the ability to adapt to market changes. Ultimately, proper store classification contributes significantly to the success and sustainability of companies in the competitive mass-consumption environment.