Variety Stores in Colombia

PROSPECTS

Challenge of breaking the cultural preconceptions that hamper development

Although variety stores continued to see current value growth and a slow rise in outlet numbers in 2019, it remained a very small channel. Colombians perceive variety stores as outlets from which to buy cheap bric-a-brac, whose low prices practically guarantee poor quality and lead to quick disposal, so are seen by many as a waste of money.

A poor reputation leads to consumer suspicion

According to retail trade associations, the impact of the variety stores channel is significant not only in the local retail environment, but in the overall economy. Although variety stores is becoming a more important channel, it carries a reputation from the past for informality, illegality and disorder.

Awareness of the discount model is a development opportunity

Due to the rising popularity of discounters, consumers are now more used to formal legal retailers that offer them quality products at low prices. They also now better understand the fixed-price concept offered by some variety stores.

COMPETITIVE LANDSCAPE

Dollar City is having an important impact on the competitive landscape

Variety stores was shaken by the arrival of Central American player Dollar City. This was the first major fixed-price retailer seen in Colombia, and has an aggressive expansion plan.

Players need to renew their product range every season

One factor that entrepreneurs in variety stores agree on is the cyclical demand for their products. Therefore, to compete successfully, players have to adapt their offer and renew their inventories.

Operational and financial leverage strategies to compete

The strategic and competitive landscape of Colombian variety stores allows players to have low but constant profits. These businesses involve a very simple administrative structure, with a number of vendors that rises or declines according to the season, negotiations with suppliers on volumes and prices, and financial negotiations to use short-term credit, seeking to pay for everything in cash.

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