Carrefour becomes second largest retailer in Latin America

The surprising acquisition of Grupo BIG by Carrefour's Brazilian subsidiary for R$7.5 billion, settled after a few months of negotiation and announced on Wednesday, is the largest deal ever seen in the domestic retail market in value.

As a result, the French group is now the second largest retail network in Latin America, behind only of Walmex, Walmart's operation in Mexico and other five Latin countries. Carrefour's Brazilian business for the first time surpassed Chilean Falabella. "It is a sign that it is a good time to invest in Brazil, even with all this scenario that the world is going through," Carrefour CEO for Brazil, Frenchman Noël Prioux, says.

With BIG, Carrefour reaches R$100 billion in gross sales per year in 876 stores and 137,000 employees. It thus increases the gap to its direct and indirect rivals. It now sells twice as much as GPA, which grossed R$55.6 million in 2020 with twice as many units (about 1,500 including Colombia) and also twice as many sales executed in the country through Mercado Libre's platform, Brazil's largest online company.

Carrefour now controls about 24% of food retail in the country, according to analysts, from 16% in 2019, and will become stronger in regions less explored by the group, such as the Northeast and South, where BIG operates with old Bompreço, BIG and Nacional stores. In the Northeast, it increases its store base by 75% and in the South by 80%. It also expands bargaining power by gaining scale, as Carrefour's annual revenue grows by 25% with Big, and reinforces the logistics structure with 15 more distribution centers, which will be key for the company's digital model, reliant on fast deliveries to be competitive. According to consultants' calculations, the company may have accelerated its growth by up to two years by acquiring BIG.

Sam's Club, a Walmart brand controlled by BIG in the country, is a new front. It includes 49 stores and accounts for 25% of BIG's sales.

The company will convert BIG's wholesale units Maxxi into the Atacadão brand, while part of BIG and BIG Bompreço stores will be turned into...

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