I just returned from the annual NACS Global Forum in Sao Paulo, Brazil and got a very good impression on the opportunity for convenience retail in developing countries such as Brazil.

I admit, visiting Sao Paulo to attend a conference just for the weekend is crazy when you have travelled all the way from Europe.

Sao Paulo is a metropolis with 18m people and, if you want to see a fair bit of the city, it’s impossible to do over one weekend. Unfortunately, my schedule didn’t allow it but, thanks to the action-packed programme NACS had organised, I had the opportunity to see some really interesting c-stores.

After arriving at the conference I spoke with some locals and soon discovered Brazil is a totally different retail environment to the one we are used to in Europe.

It is one of the fastest growing BRIC countries with a rapidly growing middle class. However, with a population of 18m in one city, the average journey time to work is three hours – one way!!

There are extremes: poverty, a growing middle class and a top 1%, who avoid traffic jams altogether by using a helicopter.

Only 16% of the petrol stations have a shop. You would think these stores would be below par, because they have a growing middle class consumer base and no competition. But far from it.

We visited stores from Petrobras, Ipiranga, Rajen and others that would be top in class if you put them into the heart of Paris, Tokyo, Johannesburg or LA.

These operators understand frequency of visit is key to the petrol business but the margins are made in the store.

These forecourts offer a quality of foodservice and in-store design of which many people in Europe could only dream.

Their owners also understand that if you want to have happy customers then you need happy staff, who feel they are a part of the business.

Talking to some people from Brazil I learned that many things changed in recent years, and most of these changes are contributing to the future of the convenience shopping format.

• In May 2012 the unemployment rate in Brazil reached a low of 5.8%, meaning this newborn labour force can afford more than ever before.
• Brazilians have money to spend on products and leisure time activities but they have less time because they have busy business and social lives.
• Owning a car or a motorcycle in Brazil has become more affordable too because they can be paid for in instalments over long periods.
• And Brazilians do spend money. I talked to a colleague of mine who grew up in Sao Paulo and now lives in Germany. She told me that from her own experience, Brazilians have never been really good at saving money. This may be the consequence of periods of high inflation, which other South American markets currently face. In those situations people spend as soon as they get paid because they never know what their money will be worth tomorrow.
• Today, Brazil’s passenger vehicle fleet consists of approximately 27m vehicles and it grows in an unrestrained manner. Statistics show it will probably reach around 52.5m vehicles by 2020.

Looking at the recent developments in the convenience market you can see frequent investments are being made in the convenience stores located at petrol stations. New joint ventures have been set in motion to explore alternatives and innovative solutions.

Recently a further trend has emerged – the introduction of well-known restaurant chains inside convenience stores, which offer high quality fresh food, designed to be consumed on site.

In some cases, this format is already more profitable than existing stores from the same chains, which are located inside shopping malls.

It is a known fact in Brazil foodservice provides the majority of the gross profit at a petrol station.

One of these restaurants is Spoleto, a well-known Italian restaurant chain which can be found in just about any shopping mall in Sao Paulo. Its test unit is located at a petrol station and is generating the same sales volumes as at certain shopping mall locations.

While still an experimental concept for a petrol station, it has proven profitable; so much so that other kinds of service providers have launched similar joint ventures, including travel agencies and laundry chains.

Long working hours and extended store opening hours are shaping Brazilians’ shopping habits too. In addition, traffic congestion and astronomical car parking charges are impacting Brazilians’ daily routines.

While the best offers are usually located away from central locations, consumers don’t want to travel in heavy traffic to do their shopping.

As a result, shoppers are willing to pay more for convenience. Brazilians also have a tendency to wait until the last minute to get something done. Paying more for a service if they can get it quickly and whenever they want it is therefore acceptable.

The Brazilian trait to wait for the last minute and to spend sooner rather than later is an ideal environment for convenience retailing.

Coupled with increased spending power and time pressured consumers who work long hours and enjoy a hectic social life, convenience retailing is poised to grow quickly and generate good margins.

Convenience stores are typically based in highly-frequented locations, with ample parking spaces. They offer long opening hours and a deep assortment in core categories.

Through this channel, new goods and services can be also found and it shouldn’t be forgotten this retail format is also quite flexible.

The convenience sector presents a big opportunity for developing countries to satisfy growing consumer demand and it offers scope to develop a profitable retail business.