Essential products in the family shopping basket, such as milk, oil or toilet paper, among others, are part of the products that families buy the most in the Colombia in stores known as 'hard discounts'
In Colombia, families have changed their shopping habits due to high inflation and the economic crisis, increasingly opting for so-called hard discount stores to make their household purchases.
According to an analysis by NielsenIQ (NIQ), a leading consumer intelligence company, this type of establishment has experienced significant growth in 2023 in Colombia, standing out for its ability to offer products at discounted prices.
During 2024, hard discounters have seen an increase in their sales volume of 12.1% compared to the previous year, contrasting with the negative trend of other sales channels that suffered a contraction due to the austerity measures adopted by consumers.
NIQ revealed that this increase was mainly due to the purchase of essential products such as milk, oil, toilet paper, among others, which reflects the growing importance of these establishments in the family budget.
With a remarkable 75% of this growth attributed to an increase in the frequency and volume of purchases by regular consumers, and the remaining 25% to new customers from traditional supermarkets, neighborhood stores and drugstores, hard discounts are consolidated as a preferred option for many Colombians.
According to Camilo Escobar, director of Customer Success for NielsenIQ Colombia, this phenomenon is not temporary but part of a solid and growing trend in the country, he told Portafolio.
It is estimated that 96% of Colombian households shopped at these establishments in 2023, underscoring their relevance in the country's retail market.
From a modest 2% of total consumer spending in 2014, hard discounts have climbed to 25% in 2023, demonstrating their considerable impact on consumer habits and competition with other retail formats.
This expansion has resulted in a scenario where, according to Escobar, these establishments emerge as an essential component of the consumer landscape in Colombia, effectively positioning themselves to continue growing in the future.
“In summary, the hard discounter channel has emerged as a key player in the mass consumption landscape in Colombia, driving significant growth in a context where other channels are experiencing contractions. Its ability to offer products at competitive prices and its rapid expansion throughout the country position it as a fundamental store format for Colombian consumers in the years to come,” Escobar told the media specialized in economics.
How does the hard discount model work?
The hard discount model's objective is to offer a certain limited amount of assorted products at very low prices. However, it is worth highlighting that this type of business has a reduced profit margin, and its guidelines aim to generate greater operational efficiency combined with cost optimization.
The success of these discount stores consists of attracting customers with low prices but at the same time being competitive with other platforms, and to do so they join forces to focus their product offering on everything related to daily consumption.
Some of the costs that are reduced under this discount store scheme are those related to advertising and promotional expenses. In addition to this, several of the products that these stores handle usually include private labels, which are manufactured by the same hard discounts.
In addition to the above, these store models always have a high turnover and availability in their products, in addition to providing their customers with a very simple experience when shopping, and this translates into the few aisles and the number of checkout stands, to make it easier to pay. and thus help reduce the number of decisions that the consumer must ultimately make.
Read more: Así han cambiado las costumbres de compra de los hogares en Colombia: 9 de cada 10 prefieren comprar en tiendas de descuento como D1 o Ara (infobae.com)
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