How Jüsto stands out in Mexico’s competitive grocery market

Date : 01 April 2021

Mexico-based Jüsto (Spanish for fair) is a pureplay grocer. It is committed to offering customers fresh, and high-quality produce and meat at fair prices.

It achieves this by working directly with suppliers and managing the complete end-to-end supply chain, without using intermediaries. This shortens the supply chain, meaning perishables do not spend lengthy times on shelves, losing freshness.

The cost saving of working with suppliers is transferred to the customer, who receives fresher products at greater value.

Selling local products and supporting SME’s

Jüsto offers a strong selection of local brands and products. These account for around 20-25% of the total mix, which it says has potential to grow. Part of Jüsto’s value proposition is supporting the growth of local producers by giving them “fairer” terms (compared to mainstream supermarkets).

It uses its local offer to differentiate itself from competitors, selling products customers would not find on the shelves of leading grocery chains. For example, Queso Oaxaca, a cheese produced in the Mexican city of Oaxaca, is one of its best-selling products and is one that customers would normally only find in independent or regional supermarkets.

The main challenge of working with small and local producers is that their businesses cannot always grow at the same speed as Jüsto, which creates difficulties for scaling the offer.

Expanding and developing the assortment

Comparatively, Jüsto’s range is much smaller than other Mexican retailers like Soriana and Chedraui. However, Jüsto’s range is sufficient for fulfilling a weekly shop, with the retailer typically offering at least one or two brands per product. Jüsto continues to expand its range, using customer data to strengthen its offer. In the future, the retailer is expected to use its data to develop private labels.

Source: Jüsto

Being an online and tech-driven retailer, Jüsto has the benefit of being agile. This gives it the flexibility to make daily changes to its range, something that could take a large brick-and-mortar retailer a month to implement.

Committed to reducing food waste

In 2020, Jüsto announced its ambitious target of having less than 3% of waste. It tackles waste using algorithms and artificial intelligence to accurately forecast demand. The business has already surpassed its target and believes it could get below 1% in the future. This is highly impressive, given traditional supermarkets have shrinkage of approximately 35%.

How does the Jüsto business operate?

Jüsto uses a network of dark stores, in addition to some larger fulfilment centres. The dark stores are set up like stores, but with much greater efficiencies. It leverages Atlas software, which helps its pickers to pick orders quickly. As the business expands it continues to open additional dark stores.

Source: Jüsto

Who are its competitors?

As an online grocery delivery business, some could assume Jüsto’s competitors would be Mexico’s last mile businesses, including Rappi and Cornershop. However, under closer inspection their operations are very different and Jüsto’s main competition is from supermarkets.

How does Justo differentiate from last mile delivery services?

Last mile aggregators, such as Rappi and Cornershop, have a 10-15% mark up, making them more expensive than Jüsto. Both are city-based models, where there is a higher population density. However, the aggregators are much more focused on speed and convenience. Their customers typically order smaller tickets, with delivery fulfilled in under an hour. Rappi and Cornershop drivers mainly use scooters, so there are size and weight limitations to how big an order can be.

On the other hand, Jüsto’s orders are typically bigger, top up and weekly shops, which are often delivered by car. Although Jüsto does offer an ‘urgent order’ service, which is fulfilled in under an hour, most of its customers use either same day booking slots or next day deliveries.

Source: Jüsto

Our view

We are impressed at the speed Jüsto is growing sales, while also retaining customers through its efficient delivery service, which is highly convenient. Its wide mix of local and mainstream brands enables customers to perform their full shop online, without missing out on their favourite products. The business does an admirable job of supporting local businesses and farmers, reducing waste, and contributing to a circular economy.

For more information on Jüsto, see our article covering how the retailer could disrupt the grocery market in Latin America.

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