DIA's Latin American operations have been an important growth element within the wider business over recent years. Currency fluctuations aside, its Brazilian and Argentinean operations remain in robust shape, continuing to grow on a like-for-like basis ahead of their respective markets, as well as through new store development.
Brazil and Argentina combined now account for one-third of group sales, and well over two-thirds of total international sales. Here we look at five ways DIA is growing in the region.
Showing its understanding of shoppers' needs in Argentina
DIA's value-focused model is highly valued by Argentinean shoppers. Its three different formats are well-established in city centres and help people shop quickly, easily and affordably in a market that has often been beset by inflation over the past 20 years. Traditionally focused on low prices, DIA has made a real effort to connect with shoppers and show its understanding of their needs. For example, 91% of purchases in Argentina are made via its loyalty scheme, and it's developed a level of engagement with its customers, through a variety of initiatives, that most other retailers can only aspire to.
Expanding into new regions in Brazil
DIA continues to expand in Brazil, entering new regions. It is now present in five states: São Paulo, Minas Gerais, Bahia and Rio Grande do Sul and, following recent expansion, Rio de Janeiro, where it has opened stores in five cities close to the city of Rio de Janeiro. Its highly successful 'experts in savings' programme, established in Argentina, is now also present in Brazil. Aimed at DIA's core, female shopper, 'Especialistas em Economia' is part of the strategy to strengthen engagement and interaction with this group.
Private label is a point of difference in Latin America
Private label in Latin America accounts for 34% of DIA's gross sales. While below the 52% private label share in Iberia, this still stands out well ahead of its key Latin American competitors. In Brazil private label is a vital part of the mix. By giving shoppers low prices and quality, DIA is winning over brand-oriented Brazilians. In Argentina, DIA offers more than 1,000 private label products including specialist ranges like gluten-free. It claims to be market leader in private label, with one in every two private label products sold in Argentina carrying the DIA name. Importantly, this helps boost wider value perceptions in markets like Argentina, where many shoppers remain very value conscious.
Testing the potential for DIA in Paraguay
DIA entered Paraguay in 2016, in a relatively low key way, via a franchise agreement with local importer Distribuidora Gloria. The first store opened in January 2017. DIA plans to open 22 outlets in its first year, increasing this to 90 in five years' time. It will supply the network from its operations in Argentina.
Expanding via franchise
Growing via franchise is a core part of DIA's overall strategy. At group level it operates 62% of stores under franchise (at end 2016) compared to 27% in 2009. And the franchise strategy is well-entrenched in Latin America - in Argentina, 66% of stores are franchised, while it's 64% in Brazil. Importantly, this could open up more rapid future growth opportunities for the business across, for example, other parts of Brazil, for a format that is increasingly proving its value and relevance to a growing number of Latin American shoppers.
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