Ara to open around 130 new stores in Colombia in 2020

Oliver Butterworth
Retail Analyst
@RetailAnalysis

Date : 26 March 2020

Portuguese retail group Jerónimo Martins, owner of Colombia-based discount chain Ara, recently announced its 2019 results and detailed plans to open 130 new Ara stores in 2020. The business launched in Colombia just seven years ago and closed 2019 with 616 stores, with 85 (84 net) openings in 2019.

Source: IGD Research

Ara delivers solid 2019 results

Ara reported total revenue of €784m (US$848m) for 2019, a 30.8% annual growth. Like-for-like sales were up an impressive 17.6% (+27.9% in Q4), which it said was driven by strong price investment and the assertiveness of its offer.

Ara’s performance was also supported by the macroeconomic conditions in Colombia. GDP was up by 3.3%, compared to a 0.1% average in the region. There were increases to the national minimum wage and private consumption, which supported growth too.

Two new distribution centres will support a more regionalised approach

Ara is taking a regional approach to ranging its stores as consumption differs across the country and there are many regional brands. To support this, in 2019 it made changes to its organisational structure to give more autonomy to each region and create a more dynamic business.

At the beginning of March, Ara opened two new distribution centres, located in Montería (northern Colombia) and Pereira (the west/coffee growing region). It will use these to bolster regional operations and develop stronger relationships with local suppliers.  

Nuno Aguiar, CEO of Jerónimo Martins in Colombia, said “At Ara we constantly work on optimizing processes to offer the best products at low prices. With the opening of these new distribution centres we want to enhance responsiveness. This allows us to continue strengthening our presence in the north of Colombia, the western region, the centre of the country and, in the future, penetrate new areas.”

Ara’s soft-discount proposition helps it to stand out in an increasingly competitive market

The discount channel is slightly over a decade old in Colombia. The three major players (D1, Justo & Bueno and Ara) now operate over 2,500 stores. Unlike competitors D1 and Justo & Bueno (who follow the hard-discount model), Ara’s proposition follows the soft discount approach and stores feature a much broader range of perishables.

Source: IGD Research

Source: IGD Research

Ara’s product mix of roughly 1,000 SKUs is 50% private label, so it differentiates by having a higher concentration of branded products than its competitors. It offers the most well-recognised branded products in most product categories, giving customers a direct price comparison and the choice between purchasing mainstream brands or private label throughout the store.

Source: IGD Research

This report will give you a view on how the discount channel is evolving globally. Discounters use a more shopper centric strategy, they invest in technology in their stores and evolve their assortments to align with latest trends.

We take an in-depth look at the discount channel in Latin America. We focus on key markets, like Brazil, Colombia and Mexico, and the retailers driving growth in the channel, including ara and Bodega Aurrera. We consider the trends supporting the channel's expansion across the region, including private label growth and the targeting of core shoppers, and the implications of the channel's growth on suppliers.

See the latest industry news on Latin America.