D1 is making its presence felt in Colombia. We look at three reasons why the discounter is one to watch.
1. Wide presence and expansion plans
D1 stores are owned and operated by Koba which in turn is majority-owned by business group Valorem. D1 began operations in Medellín in 2009 and now has almost 400 stores (370 at July 2015) in more than 100 municipalities across the regions of Bogotá Savanna, Antioquia, Eje Cafetero and Valle. With stores situated in convenient neighbourhood and residential locations, D1 is currently concentrating expansion on Bogotá, at a moderate pace to see how stores are received.
2. Hard discount model with private label focus
D1 stores use a standard model. They span between 250 and 400 sq. m and stock around 500 products, the majority (c. 70%) of which are private label, at prices 30% - 35% lower than the market. Valorem states that it follows the hard discount model created by Aldi and, true to the pure hard discount philosophy, stores do not provide parking or shopping bags, and only accept cash. D1 does not take promotions or invest in marketing or advertising.
3. Focused strategy and team
In an interview with Dinero.com, Valorem president Carlos Arturo Londoño said D1 has been extremely careful in terms of controlling costs, expenses and logistics, with a well-trained and careful team. He believes that although anyone can look at prices and processes and try to copy them, D1's attention to detail makes its model harder to replicate.
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|Catherine Ellwood is an analyst at IGD, responsible for research into Latin American and European FMCG markets and retailers.|