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Carrefour Brasil's E-Commerce Surges, But Coronavirus Costs Curb Gains

Published on Apr 14 2020 8:39 AM in Coronavirus tagged: Trending Posts / Carrefour / Brazil / World News / Coronavirus

Carrefour Brasil's E-Commerce Surges, But Coronavirus Costs Curb Gains

Carrefour Brasil has seen its e-commerce sales more than triple over the past month as Brazilians have stocked up on food and other supplies during coronavirus lockdowns, but the cost of new hiring and other measures to cope with the pandemic may offset those gains, its chief executive told Reuters.

One of a handful of large supermarket chains scrambling to adjust to drastic shifts in the market over the past 15 days, the local subsidiary of France's Carrefour SA has started taking the temperature of employees and customers entering its stores, hired thousands of workers and battled suppliers over price hikes on basic products.

Coronavirus Impact

Brazil's coronavirus death toll rose to 1,223 people on Sunday, while the number of confirmed cases hit 22,169, data from the health ministry showed.

"We managed to move early and quickly because we had experience with this epidemic in Europe, where it all started earlier, and now we are even sharing some of our Brazil initiatives with France," Noël Prioux, CEO of Carrefour's Brazilian unit, said in an interview on Friday.

So far, about 3,000 employees have been put on paid leave including members of "at-risk" groups such as senior citizens and pregnant women and those showing symptoms of COVID-19, the respiratory disease caused the new coronavirus.

Since the pandemic hit Brazil, the retailer has hired 4,000 temporary workers and plans to add a further 1,000 in the coming days, Prioux added. Carrefour Brasil employs approximately 86,000 people in the country.

Taking Temperature

Besides taking its employees' temperature on a daily basis, the retailer is now doing the same for customers entering stores, the only major food retailer in Latin America's largest economy to take such a step.

"Fever does not mean you're infected (with coronavirus), so customers can either give us their shopping list or we give them a mask and gloves to do the shopping themselves," he said, noting that its parent company is now adopting the same practice in some French cities such as Nice.

As food prices have soared despite overall inflation falling to a quarter-century low, Brazil's largest food retailer has also stepped up negotiations with suppliers to avoid shortages and price hikes for 200 in-house products until June 3.

"We're boosting volumes and, in return, our producers keep the prices unchanged," Prioux added, highlighting recent spikes in the prices of beans, milk, vegetables and fruits as more people cook at home rather than going out to eat.

Online Demand

While sales remained relatively stable in its wholesale division known as Atacadão - as higher demand from smaller supermarkets, bakeries and other essential businesses offset restaurants and bars closed by lockdown decrees - e-commerce is booming.

"E-commerce sales have more than tripled in the past month and shopping frequency levels are also higher, but we don't know if this will continue in the future," Prioux said.

Online grocery demand was already accelerating in late 2019 before the coronavirus crisis was even on the horizon. Carrefour Brasil in February posted a 40% rise in fourth-quarter online sales, with e-commerce food sales jumping more than fivefold.

Altogether, the cost of coronavirus-related actions is likely to offset higher sales in recent weeks and ultimately keep a lid on margins, Prioux said.

"We're selling more but we're also spending more," he said. "As of today, we're seeing margins more or less the same" as before the crisis.

Market participants stress that the resilience of Carrefour Brasil's business during the coronavirus crisis is reflected in the company's performance on the stock market. In March, its shares remained relatively stable while Brazil's benchmark index Ibovespa tumbled almost 30%.

News by ReutersClick subscribe to sign up to ESM: European Supermarket Magazine.

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