Argentine supermarkets use technology to fight giants

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BUENOS AIRES -- As the supermarket giants continue to gobble up Argentina's corner grocery stores, some of the little guys are fighting back with the latest in virtual shopping.

Local supermarket chains Gran Canasta and Todo Supermercado are keying into electronic shopping in a bid to lower costs and offer new customer services in the highly competitive sector in which 60% of market share is already controlled by mega-supermarkets.

The new system, set to begin this month, works as a direct hook-up between the customer's personal PC and the supermarket. Users will receive a smart card, already charged with money, with which to make payments. The scheme does not require a connection to the Internet.

To introduce potential clients to the service, Gran Canasta has built a new $2m store in Buenos Aires. The store will have demonstrations and will sign up new customers to the system, which will offer some 17,000 products - 12,000 more than currently available at the chains' conventional stores and close to twice as much as giants like the French-owned Carrefour and the U.S.' Wal-Mart, which has just announced it will invest $76m in four new stores in the Argentine interior.

Virtual shopping is risky however, considering 50% of supermarket sales are impulse buys, notes marketing consultant Dario Ahuad. Fresh produce sales could also suffer and the chains could lose the opportunity to develop their own brands, whose sales are often dependent on the way in which they are merchandised, he says.

At same time, however, the system offers new opportunities for direct marketing. The supermarkets can sell valuable data on customer buying behaviour to suppliers eager to improve their own marketing, says Saiz.

Copyright October 1996, Crain Communications Inc.

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