Supermarkets Win, Public Markets Lose

Among the segments that have not suffered but in fact benefited from the COVID-19 contingency, at least for now, are self-service food retailers, namely supermarkets. On May 11, supermarket chain La Comer reported that its earnings had in 2020 so far risen by 6 percent compared to the same period last year. The primary cause, the company stated, is the accelerated purchases by consumers as a result of stocking up and panic buying. Another reason could be that it is a supermarket that targets middle to upper classes, a demographic which is more economically resilient. According to an analysis by Monex Casa de Bolsa, a financial services group, La Comer saw positive bookings across all its retail arms. In addition, its new e-commerce platform ‘La Comer en tu casa’ recorded significant growth. Apart from La Comer, Chedraui, Soriana, and Walmex (which includes Superama, Sam’s Club and Bodega Aurrera) have all reported sales growth in 1Q20 as a result of COVID-19.

It is estimated that around 65 percent of Mexican consumers purchase goods at supermarkets. The largest supermarket group in Mexico, Walmex, controls around 65 percent of the market with supermarket chains for different demographic income segments. Last year it increased its market share by an estimated 5 percent as it opened up 134 new stores in the country. The shift in consumer patterns during COVID-19, to more health and hygiene products and food products with a longer expiration date, has not hurt supermarkets as they can offer these products and have greater ability to make fast adaptations in supply chains. According to a report from the Mexican Stock Exchange (BMV), however, risks for supermarkets remains. The impact of the crisis could still reflect in ‘a loss of purchasing power, interruptions on the supply chain, increases in operational costs due to health and sanitation measures and unfavorable financial effects of the exchange rate.”

Small vendors in public markets have not experienced the boost that supermarkets have felt. Instead, COVID-19 has hit sales hard. By March 31, the Collaborating Merchants Front of Mexico’s Public Market Service (FCCSPMM) reported that sales in public markets in Mexico City have dropped by 60 percent. Many small businesses are losing business as consumers are looking to prioritize food purchases over other items during financially stressful times. In addition, social distancing and home quarantine have drastically reduced crowds, which has affected food sellers too.