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Strong expansion of convenience stores creates space for creative solutions between chains and logistics operators.

Peruvian retail is undergoing an important process of transformation with the strong expansion of convenience stores. Although these are not entirely new in the Peruvian market because they already existed in the fueling stations (with chains Ready !, Viva, Jet Market, among others) and in some pharmacies (with MiMarket of the Mifarma chain); the novelty lies in the accelerated growth of the stand alone format, driven by the Tambo + and Aruma stores, chains managed by Lindcorp. To these will be added the Mexican Oxxo which has already started to open stores in Lima, while it is expected that the purchase of MiMarket by InRetail (of the Interbank Group) and Viva by the Romero Group will also boost the sector.

This market has a great potential for growth both in Lima and in the provinces, the latter being an area that would begin to be exploited by Tambo + starting next year. According to the consultancy Euromonitor, while in Peru there is a convenience store for every 800,000 inhabitants, this ratio is 6,000 in the Chilean market. In addition, this consultancy expects the sales of these chains to go from US $ 21 to US $ 62 million between 2016 and 2021. Precisely, for the year of the Bicentennial of Independence, both Tambo + and Oxxo expect to have about 600 stores each a.

Challenges for logistics

If we consider that a convenience store can offer up to 5,000 products (grouped in 19 categories) of 200 brands in each store, and that this chain expects to have 120 stores of 100 square meters each by 2023; we can get a first idea of ​​the logistics complexity that the aggressive expansion of convenience stores will mean both in Lima and in the provinces. For example, when the Aruma chain was launched, each supplier supplied directly or through distributors to its premises; However, the current trend is to centralize the supply in the warehouse of a logistics operator, to cope with the large number of stores that will have
throughout the country.

It should be remembered that the boom of convenience stores will involve moving large areas with large volumes that are supplied taking advantage of economies of scale; to small volumes, with a large number of deliveries and delivery points (stores) that have to be supplied faster. Therefore, they should take into account the following considerations:

Knowing that the convenience store format handles surfaces of between 50 and 100 square meters per store, establishments have to handle inventories, replenishment and exhibition very well. In addition, the supply must be fast, precise and the most efficient, otherwise the logistics costs could rise significantly.
Since the consumer is looking for a quick purchase in stores for convenience, they can not receive 15 suppliers in a day because the employees would waste a lot of time attending them. In this sense, it is advisable that these chains centralize orders in a warehouse, make sorting of these and make one or two multi-day deliveries per day in the time ranges in which there is a lower flow of customers.
In addition, it should be considered that some suppliers sell minimum clearance lots. So, if for example, a convenience store only needs to replace six shampoos of a brand but the minimum lot is 12, the difference will have to be placed equally in the gondola, taking space from other products that can sell more, given that the Surplus can not be placed in the aisles. Faced with these commercial policies of suppliers, the centralization of the offices in a logistics operator takes relevance, as this will provide each establishment with the necessary replacement quantities.
In the future it will be important that convenience store chains and their logistics operators integrate the reading of inventories. In this way, the second will not wait for the stores to place the orders, but will manage the inventories and attend to the replacement needs automatically. This more efficient process will make the chain maximize its sales. This would imply that the customer gives all the references (SKUs), the estimated demands, the assigned spaces, so that the logistics operator fills the gondolas according to their commercial policies, while the chain will dedicate itself to selling which is its core business. That would be an interesting and very beneficial synergy for the chain.
In that sense, the strong expansion of convenience store chains and the consequent increased competition among them, will make their logistics operators more creative to maximize the square meter of each store, providing options such as high fractionation, time windows and multi-destination deliveries.

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