Supermarkets Aim for Bigger Market Share
WHEN Enrique Uribe first opened Más x Menos de Cuesta de Moras in 1960, Costa Ricans were shocked by the concept of self service at a grocery store, an idea first introduced in New York in the 1930s.
Thieves will steal the goods right off the shelves, they thought. When customers did enter, some were so accustomed to being helped by attendants, they did not serve themselves.
“Instead, they called over an assistant and pointed to the shelf and said, ‘I want this can of beans,’” Javier Del Campo told an audience last week at a conference about the past, present and future of supermarkets in Costa Rica.
WHILE supermarkets have since become commonplace, there is plenty of room for growth in Costa Rica, according to Del Campo, director of corporate marketing for Corporación Supermercados Unidos (CSU), which includes the chains of Más x Menos, Hipermás, Palí and Maxibodega.
Fifty percent of the food that Costa Ricans purchase is bought in supermarkets, according to Del Campo. The rest is purchased at municipal markets, pulperías, farmers’ markets and specialty stores. In comparison, 70% of foods are purchased in supermarkets in Argentina and more than 90% in the United States, Del Campo said.
“The market (in Costa Rica) is still much larger than what supermarkets have,” he said.
CSU’S plans for expansion come as the Ministry of Agriculture tries to revitalize municipal markets, such as the Mercado Central in San José, a plan announced last month (TT, March 5). As San José has become saturated with supermarkets, CSU hopes to penetrate areas outside of the metropolitan area, including San Carlos, Guanacaste and Limón, Del Campo said.
The growth of CSU has been gradual compared to other chains, according to Del Campo.
In six years, for example, the chain Mega Super has expanded from two stores to more than 60, although 50 of those were buyouts of independent markets.
Since the first Más x Menos opened in 1960, CSU has grown to include 22 Más x Menos, 83 Palí, three Hipermás, and two MaxiBodega markets.
The latter two were established in 1998 and 2001, respectively. Most of CSU’s growth has happened within the past 20 years, because of the fact that Costa Ricans continued to shop primarily at traditional municipal markets through the 1970s, according to Del Campo.
IN the early 1980s, 25 supermarkets existed in Costa Rica. Today, there are more than 175 chain grocery stores and more than 100 independent supermarkets.
The economic crisis of the 1980s allowed for the growth of discount stores like Palí, which reduce service to allow lower prices. In Palí, for example, products are not removed from the boxes they are shipped in, there is no air conditioning or background music, and a much smaller selection of products is offered.
Shoppers at Palí are not tempted with expensive items, Del Campo said. Approximately 3,000 different products are offered at Palí, while more than 15,000 are sold at Más x Menos and between 45,000 and 60,000 products are offered at Hipermás.
THE effort to offer competitive, low prices is limited by the low number of suppliers that provide goods to the country’s supermarkets, according to Del Campo.
In the last three years, 24 companies provided more than 60% of the goods purchased by CSU, an extremely high concentration compared to other countries, according to CSU management.
Del Campo attributes the increase in popularity of supermarkets to the growth of cities, the increase in population density and a changing style of life.
WHILE people still shop at the 14,000 neighborhood pulperías throughout the country because of their convenient location near home, they also go to supermarkets to get everything they need in one place.
“The couple who both work don’t want to spend a lot of time shopping,” Del Campo said.
They also don’t want to spend a lot of time traveling. Developers believe customers should have to travel no more than 10 minutes to get to the supermarket, he said.
“We don’t have a car, so we have to come where it is close,” agreed Beatriz Castro, who shops at the Más x Menos in San Pedro, just east of San José.
SOME areas can support more than one supermarkets. Still, saturation of the market is one reason CSU is looking outside the Central Valley – and outside the country.
In addition to expanding the number of stores in Nicaragua – where CSU already operates five supermarkets under the name La Unión and 19 Palí stores (TT, Oct. 14, 2003) – the chain hopes to enter the market in Panama during the next year.
CSU also has formed an alliance with Guatemala’s supermarket chain La Fragua S.A. and the international supermarket operation Royal Ahold, to create an organization with 325 markets in Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala.
You may be interested
Buchón cantina: Spritz cocktails to dine forNatalia Díaz - October 18, 2018
Buchón was the first place I tasted the Aperol Spritz, months before it became fashionable around San José. In fact,…
Tico Times Shade: What does ‘middle class’ mean in Costa Rica?Alejandro Zúñiga - October 18, 2018
It’s not often The Tico Times writes an explainer about basic Costa Rican daily living that’s equally surprising to a…
Costa Rica grants asylum to Nicaraguan activist Alvaro LeivaAFP - October 18, 2018
Costa Rica granted the Nicaraguan human rights activist Alvaro Leiva political asylum last week. Leiva is the secretary of the…