The Growth of the Nanostore and the Importance for Global Growth

Listening to Dr. Jan C. Fransoo at the Logistic Summit and Expo in Mexico City. The Professor of Operations Management and Logistics is also Dean of the Graduate School in Eindhoven. While many consumer products leaders think of retail with a modern trade bias of hyperstores, large retail formats and super stores, in Mexico the market share of the mom-and-pop is 48%. Dr. Fransoo's research supports that it is not going to change any time soon. For the consumer packaged goods companies, he forecasts big opportunities in the traditional channel. New technologies will enhance the opportunities. Success is all about logistics, supply chain, trade/credit financing, merchandising, trade and sales.

The average small mom-and-pop store, labeled here as nanostores, sells to 200 customers. They are growing 5% a year, and serve customers that earn between 4-16 US dollars a day. The future is the mobile phone and rethinking payment. It is less about enterprise systems, POS and EDI. The marketing strategies need to focus on the reduction of item complexity due to the shortage of shelf space.There is also an opportunity to consider the automation of walking routes and rethink delivery vehicles.

While many consumer packaged goods companies discount the role of the nanostore in growth strategies, we think that this should be rethought. While supermarkets have grown 42%, in the past five years nanostores/convenience stores grew at 62%.

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