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Colombia: ARA expands with more than 300 stores and a new distribution center

Updated: Mar 15

Discount Retail Chain Tiendas Ara, owned by the Portuguese listed group Jerónimo Martinss, already has 38 stores open in the department, and has just launched another in the Villahermosa neighbourhood of Medellín. The company's expansion process will have Antioquia and the Aburrá Valley as key markets.

The first Ara store was opened in 2013 in the city of Pereira. Since then, the Jerónimo Martins group has invested around 1Bn euros in Colombia.

Since it arrived in Colombia 10 years ago, Tiendas Ara has not stopped expanding and wants to continue with the pace of openings with which it comes: it has already opened 1,227 stores in more than 320 municipalities in the country. For next year, the company, which has leveraged its growth from a dual model of hard and soft discount (own private label and commercial brands), will continue with its expansion plan, in which Antioquia will be one of its key markets. In an interview with EL COLOMBIANO, Lorena León, director of operations at Tiendas Ara in Antioquia, spoke about the company's projects in the short and medium term, and how they have managed to maintain their prices in the midst of a complex global economic situation.

What are your plans in Medellín and Antioquia? "We have a very ambitious plan. We currently have more than 1,240 stores in Colombia, with two business models: stores and 'basket gardens', the latter being our wholesale model. In Antioquia, we have 65 stores, some located further to the north and west of the department, but we have also started opening stores in the Aburrá Valley since December last year. In total, we have already opened 38 stores, and we have just launched another in the Villahermosa neighborhood of Medellín. We also have three alternate warehouses, in which we have invested Peso $15 Bn to adapt. And we are already in the licensing and construction stages of our own Distribution Center, which will be located in Girardota, in which we are going to invest Peso $240Bn and should be ready by 2025. And we plan to double that amount to meet our goal in the medium term is to open 300 Ara stores in Antioquia."

Why is Antioquia a key market? "We are in 10 regions of the country, in four of them we have just arrived, and in Antioquia is where we have had the best acceptance. We still need to grow a lot and have more presence with our brand, but the percentage of people who visit us today is very interesting. We would like to go faster but we still have many issues to resolve such as compliance with licenses, land uses, all that regulatory part that sometimes slows us down a little to reach the speed we would like to have, but we are going at a steady pace."

And do you plan to have more presence in the municipalities of Antioquia? "In terms of expansion, at the moment we are very focused on the Aburrá Valley. There is a lot to grow here, there is a lot of population that we can serve, and in the latest studies we have of market penetration, in such a short time and with so few stores we have already managed to have a 3% share in that market, which although it is a very small percentage for what we aspire to, the growth has been important".

After Ara announced a few months ago that it would lower the prices of 200 of its products, other large chains joined in. How did you manage to carry out this initiative? "One of the company's values is to democratize food and give people more access not only to the basic food basket, but also to other types of products. That was a decision of the Board of Directors and investors, in order to be closer to Colombian households. So, in line with the company's philosophy, what we did was to postpone a little the business objectives related to profitability, and sacrifice that profit margin, in order to lower the price of those products in the basic basket."

What allows them to manage those low prices? "We have a lot of fronts that we attack so we don't have to pass them on to customers. We have a whole issue of operational efficiency, for example, we work with producers directly to avoid intermediaries, and 90% of our suppliers are national. On the other hand, we receive the products in the distribution centers and from there we seek to make the delivery efficient. The traditional market sometimes receives store by store. In the case of small suppliers, we have satellite warehouses where they receive, palletize and deliver to us, making logistics as efficient as possible. In short, our logistics operation allows us to receive and distribute in a way that eliminates inefficiencies and hidden costs."

Not long ago, Ísimo entered the market in Antioquia and 'scratched' another portion of the hard discount market... "We like the fact that we have competition, because that requires us to try to be the best every day. Our main challenge here in Antioquia is to grow in presence, to open more stores, with more spaces, in the neighbourhoods and municipalities."

What are the projections for the end of the year? "In the first nine months of 2023, we have grown by 48.7% in sales nationwide, compared to the same period last year. The final season of the year is missing, where consumption is much stronger, so we are focusing all our efforts, and our work teams, to be able to arrive with the best prices and promotions. For next year, our priority is to continue growing, to continue opening stores, to expand our presence throughout the national territory, with an important focus on Antioquia."



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