Strong growth by top 3 Lankan grocery retail chains

Sri Lanka’s modern grocery retail sector in Sri Lanka – dominated by Cargills Food City, Keells Super and Arpico – is expected to expand in the medium term, supported by aggressive expansion and growth in same-store sales, according to Fitch Ratings. The three companies account for more than 80 per cent of the retail trade.
Increasing per capita income and rising urbanisation should make modern grocery retail more affordable and accessible to a larger portion of the population, the agency said in a report on the retail marker. Sri Lanka’s supermarket penetration is still around 15 per cent compared to 30 per cent for regional peers with similar social and economic characteristics, which indicates the potential for the industry to grow.
The aggregate revenue of all three companies almost doubled to Rs. 121 billion in the year ending March 2017 from Rs. 74 billion ending in March 2013.
 “We believe more people are now willing to shop at supermarkets and hypermarkets compared with five years ago, helped by the competitive prices offered by modern retailers, which are equal to or even below the prices of traditional retailers. Modern retailers are able to source products at low prices due to their larger scale while most of the fast-moving consumer goods (FMCG) they sell are subject to maximum retail prices which reduce the price difference with traditional retailers. We believe customers will gradually prioritise convenience and quality over price amid rising income levels, which also bodes well for modern grocery retail,” the report said. - ENDS -