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April 26, 2011 22:05:16 | in General

Why Peru corner stores continue to beat supermarkets

A bodega in Peru: the little corner stores maintain a majorty market share of consumer goods purchases, despite the growing prevalence of supermarkets. (Photo: José Antonio Galloso via Flickr)

By Beatrice Ciabatti

Last year 143 new supermarkets, hypermarkets and convenience stores opened in Peru, yet these new openings don’t even tickle the 65,000 traditional bodegas, or corner stores, that garner 70% of total revenues of consumer products. The bodegas are not very big, in fact 61% of them are not larger than a single room, according to Alberto Haito of Arellano Marketing, whose data I use here.

Meet the modern Peruvian bodega. They used to be called “el chino de la esquina,” the Chinese on the corner, because of the predominance of Chinese owners. Nowadays things have changed greatly. Seventy-five percent of bodegas are owned by women, ex housewives that have become successful small business owners and live above the store building.

But what is their secret? The main advantages seem to be the following:

1) Proximity: There is always a bodega nearby;
2) Small scale purchases: You can buy only two cigarettes or a handful of rice depending on how much money you have for the household;
3) No-interest credit: Frequent customers can pay comfortably the next week or at the end of the month;
4) Social interaction: You can catch up with the recent neighborhood gossip!

What bodegas have had to improve is their service and infrastructure. Now they offer delivery service, ATM, payphones, mobile phone recharges and some prepare homemade sandwiches and cakes. The most sophisticated bodegas even have a DVD and CD delivery service! Yet only two percent of these bodegas have a computer, meaning that their inventory is still done manually.

Their customers are mainly housewives (74%) and 7 out of ten are considered frequent clients that visit the bodega more than once a day, another 21% visit it once a day, and the remaining 5% visit it weekly.

Yet experts forecast a difficult future for the bodegas; they will be threatened by the arrival of a new format of supermarkets which are smaller in size. The Interbank group, for example, has a new strategy with Supermercados Peruanos. The main reason for big economical groups to reduce the size of supermarkets is mainly due to the fact that is becoming more and more difficult to find the large surface areas with good locations necessary to construct super and hypermarkets.

Since a little girl I have heard of the foretold death of the Peruvian bodegas, yet year after year I have seen them multiply and become stronger, probably because they have managed to understand the habits, preferences and idiosyncrasies of their customers better than anyone else the consumer habits. But most of all bodegas have managed to establish an emotional connection and I truly feel they have set a very high benchmark for their competitors to surpass. Time will tell.

Beatrice on Peru business

How Bembos in Peru gives McDonald's a headache

Marketers and the tween generation

For Peru exports, specialize in tradition and authenticity

Beatrice Ciabatti is marketing director of Ilaria-Peru.

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# zweiosterei says :
27 April, 2011 [ 11:45 ]
Agree completely with the article. It'll be a long time before the big companies can usurp the place the bodegas have in everyday people's lives.
# pk12 says :
5 May, 2011 [ 07:43 ]

Certainly! Bodegas are part of the identity of Peru These corner stores help create community and should be supported by municipalities.

# Rick Crosby says :
5 May, 2011 [ 11:44 ]
The corners stores will always be successful in any city in Peru. They are the flavor and tradition of Peru. You might say, they are Peru's trademark.
# Elena says :
28 May, 2011 [ 05:07 ]
The first place I head for whenever I come back to Peru to visit (about every other year) is my "chino". They know me and welcome me back every time. Lima would not be Lima without bodegas!!!
# Natalie says :
30 May, 2011 [ 04:37 ]
Personally, I just can't stand the lines in the supermarkets. I always choose the bodega.
# S Miah says :
3 June, 2011 [ 06:29 ]
I really loved reading this artical, Bodegas are totally add to what makes Peru a very friendly community focused place. I hope the big capitalist companies never start affecting the small traders which will cause social damage to communities.
# Keith says :
6 June, 2011 [ 05:25 ]
My wife is from Peru and we walked to the corner Bodega to buy little things needed.  And I was taken back to the local store where my grandmother was from, in the coal mining patch towns of western PA.  I miss those local stores, and wish we had them here in the states.  I hope Peru never gets to modern so as to lose that sense of self, which is personal interaction between human beings.  That is what is so beautiful about Peru.
# Carlos Eduardo Jaramillo says :
17 June, 2011 [ 11:57 ]
Bodegas, or convenience stores, whatever one to chooses to call them, will always have a presence in retail. The simple reason why is that consumers are willing to pay more for certain categories of items (beverages, snacks, candy, tobacco, liquor....) if they can purchase them quickly and conveniently.   

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