Discounters in Colombia

PROSPECTS

Channel’s expansion strategy unclear

The penetration rate of discounters in retailing is among the highest in the country, appealing to both low- and high-income consumers. Its presence continues to strengthen, outperforming other retail channels and recording the highest current value growth within modern grocery retailers, as well as overall grocery retailers.

Players adjust commercial strategies to become discounters

Discounters is an attractive channel to enter, with smaller retailers adjusting their commercial strategies and business models in an attempt to become discounters and enter the competition with existing players. In a successfully expanding channel such as discounters, several formats will continue to adjust their strategies to offer the lowest prices, relaunching products and incorporating private label lines into their product offers, seeking to combine low prices with high quality, which is the combination that continues to attract Colombian consumers.

Expansion strategy amongst leaders

Discounters continues to witness an increasing number of store openings every year, which is one of the main strategies for the players. Although new openings involve large investments and potential losses in the short term, the aim is to attract a higher number of customers by means of cost minimisation along the chain, no advertising and economy brands.

COMPETITIVE LANDSCAPE

Combination of circumstances predicts strengthening of the channel

It is always ideal to see difficulties as opportunities, yet only a limited number have achieved this. The players present within discounters have found their best opportunity to expand with greater strength in the unstable economic situation of the last two years of the review period.

Strengthening through continual outlet openings

Each player within discounters is strengthening financially to accelerate the opening of new stores and reach areas in the country before their competitors. Justo & Bueno receives foreign capital injection in exchange for shareholding.

Attracting consumers in different territories

The key to gaining share over the forecast period will be to open in strategic locations, especially in intermediate cities and municipalities that have not yet been reached, seeking to attract new and important consumers who want a basic offer at lower prices. Each player is projecting openings that will revolutionise trade and give a new competitive scenario to any location in which they enter.

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