Assaí is investing in private label brands as a new strategy for growth and customer loyalty, at a time when the retail sector is suffering from the economic situation.
The wholesale chain officially presented its strategy in this segment on Wednesday, May 27th, starting with a basket of 25 food products, which should reach 200 by the end of the year.
“Over the past few years, largely driven by inflation and interest rates, consumers have been thinking more carefully before spending money on food,” said Sérgio Leite, executive director of operations and new business, in a press conference this Wednesday, May 27. “Consumers are making the trade-down move, but they don’t want to sacrifice quality.”
The company will operate under the Assaí brand, aimed at the end consumer, and Assaí Chef, to serve the corporate market — small restaurants and businesses that purchase in high volumes, a segment that accounts for 42% of sales and 16% of the company's revenue.
With its two brands, which started with rice and beans and recently added industrially produced bread to its portfolio, Assaí aims to serve the mid-range segment of the private label market, without being an "entry-level" brand or a name aimed at the premium market.
According to Loiane Silveira, director of private label brands at Assaí, the idea is for prices to be, on average, 20% lower than those charged by the main brands, depending on the category. The goal is to meet the demand for lower prices without compromising quality.
“We don’t want to compete in the lowest price range [with these brands]. We want to be an intermediate brand. Assaí is a brand that delivers quality. We will work on cost-effectiveness,” said the executive.
The strategy is being implemented in stages, starting in São Paulo, with products being made available in the company's 118 stores, before expanding to other markets in the country. Leite stated that the expansion depends on finding suppliers in the regions who can meet the company's needs.
Assaí is also revamping its strategy for the entry-level line, with the Econobom brand, which initially offered toilet paper and disposable cups. Further down the line, the brand is expected to include food products as well.
The company also wants to bring exclusive brands to consumers, available only at Assaí. The first move begins in July, with the sale of Chilean Paso Los Valles wines.
The assessment is that there is a lot of room for growth, considering the low penetration of private label products in Brazil. According to Assaí executives, globally, this type of product accounts for 23% of food retail. In Brazil, this figure is around 3%.
Leite said that private label brands are set to play a fundamental role at Assaí. When questioned about the effects on the company's finances, he did not go into detail, but stated that these products could account for "double-digit" revenue, in addition to increasing the company's margins by operating in categories with higher margins.
The expansion into private label brands is part of Assaí's strategy to seek new formats to expand growth and complement its offerings to customers.
Leite was chosen to lead the newly created new business and innovation area last year, responsible for private label brands and also the pharmacy unit, after Congress authorized the sale of medicines in supermarkets.
At around 2:44 PM, Assaí's shares were up 1.10%, at R$ 9.21. Year-to-date, the shares have accumulated a 26.5% increase, bringing the company's market value to R$ 12.5 billion.
