DIA Group strengthens its leadership in Brazil

Date : 02 March 2020

Oliver Butterworth

Retail Analyst

In February 2020 DIA Group appointed Marcelo Maia as the new Executive President of DIA Brazil. Maia brings a wealth of local market knowledge, with over 20 years’ experience working in distribution sector.     

Source: Linked In – DIA Brazil

Maia to drive business transformation in Brazil

DIA Brazil is going through a comprehensive business transformation. Maia will be at the helm of designing and implementing the operating model, which will be key to driving business growth.

“I am delighted to join DIA, as I see great potential in the company's approach to its customers. This challenge has motivated me to lead the process of change. I will work hard to ensure that the business is focused on customers and excellence…We will all work to ensure that DIA is the preferred choice of local customers”. Marcelo Maia, Executive President of DIA Brazil.

DIA refines its store operations in Brazil

Between Q1 and Q3 2019, DIA closed 313 underperforming stores in Brazil, including 44 DIA-owned stores and 269 franchised sites. This was part of a large-scale de-franchising process, where it reduced franchised stores from a 58% share of its total to 41%.

As of February 2020, DIA operates 883 stores in Brazil, including 350 franchised stores. It has a strong presence in the regions of Minas Gerais, Rio Grande do Sul and São Paulo.

Revitalising the DIA brand…

Over the last six months DIA has been completely reformulating its stores in Brazil to a new design. This is aimed at providing customers with a more comfortable shopping experience. At the end of 2019 it had transformed 43 stores to what it describes as being a more ‘modernised proximity concept’.

Its revamped stores were geographically spread across São Paulo (23 stores), Minas Gerais (10) and Rio Grande do Sul (10). DIA also undertook a range rationalisation, reducing the number of SKUs to simplify the offer and help it to promote the best value.

Source: Linked In – DIA Brazil

All the above changes are part of DIA’s wider five-year strategic plan, under the tag Make DIA a Champion, which majority owner L1 Retail announced in February 2019. The plan aims to turn around the business’s performance through improved operations and more profitable stores.

…supported by heavy investment

In November 2019 DIA announced the successful completion of the capital expansion of €605m (US$659m). It said this demonstrated investors’ support for the company, as well as its growth plans, highlighting market confidence in its future.

“I would like to thank our investors for the interest and support they have shown in DIA by investing in the Company at this stage and accompanying us on our turnaround journey. It is, without a doubt, a demonstration of confidence that the markets have for our vision in which we all firmly believe and are fully committed to making a success”. Stephan DuCharme, DIA Group Chairman.

The future of DIA in Brazil

The DIA Group clearly has a renewed focus on Brazil, a market that accounts for over a quarter of its turnover. Mikhail Fridman, DIA’s owner, sees the potential for thousands of stores in the country. Speaking of DIA’s potential in Brazil, he previously said it could be “an engine of growth for the company in the medium-long term, subject to receiving investment and having a clear leadership.” With this recent change to leadership and heavy investment in November, it will be interesting to see how this unfolds.

Our view

As with other markets, discounters like DIA can win customers through proximity and low costs. The key to DIA’s success will be to re-engage with customers by communicating the value and quality of its products, whilst providing a pleasant shopping environment. If it can achieve this, it will give customers a convenient alternative to shopping at the larger atacarejo’s (cash and carry stores) that dominate grocery retailing in Brazil currently.

For more information on DIA’s 2019 store closures see our article here.

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