Why small retailers endure in Latin America

Abstract

Purpose

To understand the drivers behind small‐scale retailers' collective success, even after a decade of sustained growth of the “modern” retail sector in Latin America.

Design/methodology/approach

The study described in this paper was sponsored by the Coca‐Cola Retailing Research Council – Latin America. Consumer research for this study was based both on primary and secondary sources. To understand the drivers behind small‐scale retailers' collective success, standard frameworks were adapted for evaluating their value proposition and business model. Customer‐facing value drivers were examined along with selected ratios from the strategic resource model.

Findings

In spite of being “poor,” emerging consumers have a substantial purchasing power as a group. They work with a very specific set of products, categories and store format needs that distinguish them from other consumers. These distinct needs imply that it is not “just a matter of money and time” for them to change their purchasing patterns over to the “modern trade”. In fact, the evidence shows that smaller scale retailers fit the needs of emerging consumers quite well. Despite perceptions that the small retail sector draws its resilience from informality, we conclude that that the sector can be surprisingly efficient. Furthermore, the retailers exhibit a sustainable business model.

Originality/value

Although a wide variety of studies have been developed around small‐scale retailers, less effort has been devoted to learn about local storekeepers that are actually conducting successful business, especially in reference to less developed countries.

Citation

D'Andrea, G., Lopez‐Aleman, B. and Stengel, A. (2006), "Why small retailers endure in Latin America", International Journal of Retail & Distribution Management, Vol. 34 No. 9, pp. 661-673. https://doi.org/10.1108/09590550610683184