Discounters in Colombia

2020 IMPACT

Discounters resonates with demand trends during the COVID-19 crisis

The COVID-19 crisis has served to reinforce the competitive standing of the discounters channel in modern grocery retailing in the Colombian market. While discounters players had to slow down their expansion strategies during the pandemic, they have seen a significant increase in sales because their offer has resonated with the needs of consumers in the markedly changed market conditions of the crisis.

Pandemic boosts demand for cashless payment options

Having initially only accepted cash payments, the discounters channel has diversified consumers’ payment options in recent years, with D1, for example, beginning to accept credit cards towards the end of 2019. The transition to cashless payment was significantly accelerated during the COVID-19 crisis, with the pandemic adding a new dimension to the growing popularity of cashless payments as consumers became concerned about the potential for viral transmission via cash.

Discounters brands join with last mile delivery players

In common with other modern grocery retailers, discounters players sought to develop and improve delivery services during the COVID-19 crisis, as many consumers were reluctant to venture into physical stores because of concerns about exposure to the novel coronavirus. D1 and Just y Bueno both established online ordering and delivery through partnerships with last mile brands.

RECOVERY AND OPPORTUNITIES

Further development of the private label segment

The reinforcement of discounters’ position in the Colombian market due to COVID-19 will provide a platform for the further development of the private label segment during the forecast period. Measures introduced to curb the spread of the pandemic undermined consumer confidence and purchasing power, making them more price-conscious and more inclined to both shop in discounter outlets and opt for own brand products.

Commitment to communication paying off

While discounters operators have engaged in efforts to streamline the links in their operations in recent years, players have also worked to modernise their operations and invest in strategic areas such as communication. Discounters players have opened official pages on social media sites such as Instagram and Facebook, which has enabled them to establish a closer relationship with consumers.

Hard discounters to resume aggressive expansion

Hard discounters’ growth strategies is set to continue to focus on aggressive expansion, as players seek to reach more regions of Colombia through the coverage of smaller cities and towns, as well as major urban centres. Although expansion plans were abruptly suspended by the COVID-19 crisis, they are expected to resume during 2021.