TITLE:
Retail Modernization in Peru: The Dilemma for Traditional Retail
AUTHORS:
Pablo Alocen
KEYWORDS:
Retail Modernization, Traditional Trade, Convenience Stores, Informal Economy, FMCG, Peru, Mom-and-Pop Stores, Market Stalls, Emerging Markets, Retail Capability Gaps, Inclusive Growth
JOURNAL NAME:
Open Journal of Business and Management,
Vol.13 No.5,
September
5,
2025
ABSTRACT: This paper analyzes the impact of retail modernization in Peru, focusing on the rise of convenience store formats, which are owned by large supermarket chains, and the resulting challenges for traditional retail formats such as Market Stalls (MS) and Mom-and-Pop (M&P) stores. Traditional trade refers to small, often family-run retail outlets that operate informally, with limited use of technology, minimal professional management, and a focus on serving local neighborhood communities. Despite Peru’s steady economic growth over the past two decades, the country maintains one of the highest informality rates in Latin America, with 60% of traditional retailers operating outside the formal economy (Informality refers to economic activities that are not regulated or monitored by the government, including businesses that operate without formal registration, and do not pay taxes). These traditional retailers represent approximately 65% of all the consumption, and are facing significant limitations such as limited access to credit, access to technology, and professional training. Using a mixed-methods approach that combines a literature review, market data from Nielsen, Kantar, and Euromonitor, as well as interviews with industry experts from Fortune 500 companies, this study explores how the entry of the new convenience store chains has disrupted the traditional retail model. These new modern formats benefit from key advantages such as advanced technology, professionally managed staff, data-driven decision-making, strong negotiating power with suppliers, and solid financial capital. The paper also identifies critical capability gaps for traditional trade retailers owners, particularly in human capital—highlighting the need for training to better address challenges in areas such as finance, technology, and marketing. While some general entrepreneurship programs exist, there is currently a lack of targeted support from public institutions to address the specific needs of traditional retailers. To help bridge these gaps, the paper explores available training options and proposes a set of free, practical tools focused on marketing, finance, and business management. Ultimately, the study highlights the dual nature of retail modernization in Peru: while it brings greater efficiency and an improved consumer experience, it also risks marginalizing thousands of small business owners unless proactive measures are implemented. The paper calls for coordinated action between government and private sector stakeholders to foster a more inclusive and sustainable retail ecosystem.