Discount Retail Chain D1 (owned by KOBA) turns 11 years old and manages to enter the list of the 10 companies with the highest sales in the country, with $ 7.3 billion (US$150 million). Mrs. Tatiana Mejía, its president in charge, explains the formula for success. She believes that working around an attractive offering, efficient operation, and low costs has resulted in consumer loyalty.
What does it mean for D1 to be in the "top" 10 of the largest companies?
The first thing we evaluate is the consistency and soundness of the business model. When we started with a hard discount structure, we began to break the paradigms and what we did was work around the corporate values that make us different. Customer orientation has been a fundamental pillar to understand what they need. 2020 was a challenging and challenging year in all aspects but it was one of consolidation of that value proposition and that is what we managed to capitalize on. It is a great satisfaction for us as managers, but also for all the collaborators of the organization, because this has been seeing a company grow where you have laid the bricks. Obviously, the important thing is not to arrive, the focus is now to see what to do to continue positioning ourselves.
What are the expansion plans?
We have around 1,770 stores and more than 15,000 employees, with a very young talent, adaptable to changes. In 2019 we had an opening of more than 390 stores in the country, in 2020 we did have a delay due to the pandemic but we are satisfied with more than 330 additional stores. We are in 371 municipalities. For this year we have a goal of between 350 and 380 more stores.
Is an acquisition possible?
For Tiendas D1 it is not on the table and it is not a path at this time. We have an organic growth plan.
How much do they grow in sales thanks to the expansion and by existing stores?
The expansion contributed 26% and on the other side is the 'like for like' growth (same stores) that has been sustained. Most of our stores, if not all, reach double digit levels.
Where is the value added?
There are two big variables. One is the development of the value proposition. Before the pandemic, we structured a more complete basket from the commercial area and increased the number of products, which supported us significantly because we saw that the consumption habit changed. Customers preferred to go to stores only once. What happened was that the frequency was reduced but the ticket was increased. And what we managed to capitalize on is that the number of units per ticket grew significantly. But that did not happen only because of the pandemic, but we generated product testing, we developed our brand umbrellas and the consumer began to generate loyalty towards D1. According to Kantar Worldpanel studies for 2020 we already have 10 leading own private label brands in homes.
Is your own private label brand relevant?
Understanding the hard discount, we speak that we have a very high inventory turnover, a very low cost structure and a search for efficiency. Due to these costs, our own privare label brands can be cheaper with a relevant quality and we win over the consumer to generate that loyalty. That has been the way to grow in a sustainable and guaranteed way this year.
Do they respond in this way to the reality of greater poverty and lower spending capacity? From a consumer point of view, we have been very agile in adapting. We increase the references to complement the proposal and align with its disbursement capacity. In the face of quarantines and the pandemic, we created the website, the application and the addresses. We understand that in this basic family basket that is having a significant inflationary effect, we have to look for alternatives, for example, with presentations more in line with what you are willing to spend or with what can generate greater savings.
And how do they get recognition at high levels as well?
Since we started, the entire pyramid has been contemplated. In fact, today we have a 99% top of mind of consumers and it goes from top to bottom. That is why our proposal includes democratization. The consequence of this is that we are recognized as a well-known brand, and we are recognized by Colombians. There is another concept that we applied in the pandemic, which was to offer premium products and the introduction of concepts such as the healthy line. That made us closer.
Will the "hard discount" be seen to outperform the big chains?
In Germany you can see that. The discount completely revolutionized shopping habits. I would believe, and it is a personal opinion, that if capitalized, this business model has all the potential to be a market leader.
Is it time to expand to other countries?
At this time we must solidify leadership, strengthen the structure of our stores. I think it takes a couple of years to explore an international vision. The situation, the pandemic, the unemployment, makes us concentrate on the current business and show that really all these figures that show us solidity and sustainable growth are a reality for a long time to come.
See here for more: https://www.mallyretail.com/actualidad/mall-y-retail-boletin-378-noticia-5