Crisis is Growth

The frenetic pace of the full carts in the corridors in the days leading up to the start of the quarantine, because of the Covid-19 pandemic, resulted in sales growth of 12.2% in the first three months of the year of the French group Carrefour, Brazil's largest supermarket network. The company's revenues in the first quarter reached R$ 15.9 billion, compared to R$ 14.1 billion recorded between January and March 2019. The results of the quarter show that appetite has not been affected by social isolation. One of the direct reflexes was the decision to hire 5,000 employees to incorporate the network's 87,000 employees. A substantial increase of 6% in the framework. For the senior management of the company, there is no exaggeration or precipitation. "We seek to grow organically," says Noël Prioux, the group's CEO in Brazil. The new contractors – through online selection process – start to occupy spaces left by employees away and who fall into the risk group of the new coronavirus, in addition to acting on digital delivery platforms, whose operations have skyrocketed since the beginning of social isolation. When part of the away team is back, the contractors will be relocated to the group's 30 new stores, purchased from Makro in February for R$ 1.95 billion. These units will be incorporated into the Atacadão flag, which is part of the French group. Altogether there are 698 stores (including hypermarkets, drugstores, gas stations, convenience), of which 190 of the group's wholesale and retail brand. The prospect is that the new units can be opened to the public between the end of the year and the beginning of 2021, if the Administrative Council of Economic Defense (Cade) approves the acquisition by September. The purchase of the stores will be decisive to increase the distance between the network and its main competitor on Brazilian soil, grupo Pão de Açúcar (GPA), controlled by Carrefour's biggest rival, also French Casino. While Carrefour closed 2019 with revenues of R$ 62.2 billion, GPA comes in on the tail, with R$ 61.5 billion. A difference of 1%. The acquisition strategy involves the expansion not only numerically, but also geographical. "Location was an important factor," says Prioux. "And adding to the Atacadão flag, we will be able to expand sales and reach some cities where we had no presence." Of the total new stores, eight are in the Northeast, seven in Rio de Janeiro and three in Rio Grande do Sul. None of them in São Paulo. "This acquisition will represent growth equivalent to a year and a half," says the CEO. The bet also makes sense when looking at the detail. The Atacadão network, which earned R$ 10.8 billion in the first quarter, up 13.6% compared to the first three months of 2019, recorded great demand for basic basket items, with lower prices when purchased in larger quantities. The performance contributed to the fact that most of the retail chains, with the exception of the food segment, were closed, so hypermarkets also became shopping spaces for electronic items, appliances and even clothing. As with all kinds of retail in the country during the pandemic, in e-commerce there was a brutal jump in the period. Compared to the first quarter of 2019, the increase in gmv (gross volume of goods) food advanced 235%. And to get an idea home delivery services accounted for 85% of the e-commerce segment, compared to 61% of that recorded in the fourth quarter of last year. The company's president says that to ensure the supply of shelves during quarantine, Carrefour increased the volume of purchases with suppliers, to increase inventory by 22 days, adding to the average of 35 days ahead. "With the information we had from our operations in Europe, we were able to prepare our actions," says Prioux. "In February, we created a committee and made the necessary purchases to ensure the increase in inventory and ensure the products for the huge demand," he says. And even with the strategy, it was hardly enough. The 22-day stock left the gondolas in just ten. "The first few days after the quarantine were of total madness in sales." The bullish movement has been perceived throughout the segment. The first vice-president of the Brazilian Supermarket Association (Abras), João Galassi, says Brazil has a strong and structured supply chain. "This guaranteed us the replacement of products on the shelves to serve the 25 million consumers per week," he says. "We also quickly guarantee security protocols for both employees and customers." Last year, according to Abras, the 89,800 stores in the supermarket sector made R$ 378.3 billion, corresponding to 5.2% of gross domestic product (GDP), with 1.9 million direct jobs. Although with the significant increase in the first weeks after the beginning of quarantine, the segment felt the effect of the slowdown in April, the first full month of social isolation, according to data from the Monthly Trade Survey (PMC), released on Tuesday (16) by the Brazilian Institute of Geography and Statistics (IBGE). Retail all fell 16.8% in April this year compared to April 2019. On the other hand, the supermarket sector recorded an increase of 4.7%. It was the only one of the eight segments within the survey that increased. But when the comparison is about March this year, you notice the brake. Sales in the sector fell 11.8%, which is explained by the rush for supplies early in the pandemic in Brazil. But the performance of the Carrefour group continues to keep an eye on the expansion. Scenario opposite to that experienced a little more than a decade ago, when rumors were about the departure of the brand from the country, just at the moment when its main competitor in France began to seek space in Brazil, taking control of the GPA, then in the hands of Abílio Diniz. Today, through Península Participações, Diniz is one of Carrefour's largest global shareholders. "It was a difficult time, but we got a big recovery," Prioux says. For him, Brazil is very important for Carrefour. "We have growth, results and confidence to go through the economic crisis very well." The company's shares in B3 followed the seesaw of the economy. On June 1, it was at R$ 18.40. On Tuesday (16), closed at R $ 19.00. Still, it follows below the R$ 21.80 of March 24, shortly after the beginning of social isolation. For João Galassi, of Abras, the return of the crisis will depend on factors ranging from the curve of the resumption to the volume of credit of the banking system. But in addition to monetary issues, one factor will be decisive: the quality of service. "As long as there is no vaccine, the consumer will continue to seek safety in care."