Discount Retail Chain D1 initially appeared in 2009, and little by little two more competitors joined that, together, have changed the retail landscape and forms of consumption in the country: Tiendas Ara (from the Portuguese conglomerate Jerónimo Martins) in 2013 and Ísimo at the end of 2022.
With the announcement on Wednesday of last week by the Superintendence of Industry and Commerce on the intentions of integration between the Colsubsidio Market division and Ara Stores, the latter would be close to reaching 1,500 points of sale and consolidate itself as the second force of the discounter format. Together with the D1 and Ísimo stores, this segment would exceed the barrier of 4,200 stores in Colombia.
At a time when inflation was still high in Colombia and the prices of basic products in the family basket were not competitive enough for consumers,the hard discount segment appeared as an alternative to cover this need.
Colsubsidio announced the closure of its 104 supermarkets due to "the presence of enough players of large size and investment capacity." This decision accounts for the positioning that the hard discount has earned to the detriment of traditional segments such as department stores, neighborhood stores and small distributors.
D1, the leader in the segment
Taking an X-ray of the segment, Tiendas D1 is in the lead, both in terms of the number of points of sale and the revenue it generated last year ($17.4 billion according to the Supersociedades report). D1 has 2,500 stores in 530 municipalities in 31 departments of the country. It also has a daily flow of 1.6 million visitors at its points and, to meet demand, they move more than 600,000 boxes daily in its distribution centres.
In the same way, they employ 23,000 people, half of them women. One of D1's successes is based on the leverage of private labels. According to information provided by the company, eight out of 10 of its products are their own private label.
"We have several own private label brands, market leaders, which have earned a place of preference in Colombian homes and stand out for their sales volume. For example, Rendy on toilet paper, napkins and kitchen towels; Latti is the best-selling brand of milk in the country, Bonaropa and Brilla King for laundry care and household cleaning products and baked goods in industrialized bread," said Christian Bäbler Font, CEO of D1.
Another of the company's strategies to win new customers has been the launch of a clothing line. "We incorporate the products into our Extraordinary section. We believe that an expanded basket of products is important for Colombians, even more so if it is at competitive prices," added Bäbler Font.
Ara and ísimo continue to grow
Tiendas Ara is another player in the discounter format that has gained market share, especially this year. With the opening of 87 new stores, in addition to the current 1,377, and a distribution center in Palmira (which had an investment of COP $200 billion), the company continues with its expansion process.
According to the financial report for the third quarter, Ara recorded revenues of COP $9.2 billion, which represents a year-on-year growth of 10.9%. However, during 2023, the company's activities totalled COP $12.3 billion, which is equivalent to a growth of 43.2%.
From the shore of Ísimo, belonging to the Olympic Group, it is the youngest among those in the discounter format with his appearance at the end of 2022, substituting Justo Y Bueno. Two years later, the company already has 250 points of sale in 83 municipalities in 11 departments.
Ísimo points out that, by 2027, they will already have 1,500 stores in Colombia. "The vision is to become the main hard discount chain in the country, recognized for offering innovative products with competitive and affordable prices that contribute to the well-being and quality of life of our customers, providing a unique experience," reads its website.
Reconverting 150 stores in the next three years, the Éxito strategy
In order to prevail as the supermarket with the highest profits and not lose track of discounters, Éxito is carrying out a store conversion plan that, although Juan Carlos Calleja anticipated in August that it will take three years to materialize, has already been 'converted' and aspires to close the year with at least six more. "We are in the process of simplifying our brand architecture and focused on developing these two main formats towards maximum efficiency and productivity," said Calleja.
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