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Research: Hard discount stores grew 12.1% in volume in 2023 while other formats fell

According to a study by NielsenIQ, in the last decade this format registered an exponential growth, going from 2% to 25% of Colombian household spending.


Although the economy only grew 0.6% last year, household consumption remained one of its main drivers, in contrast to the collapse in investment.


But, in a context of slowdown and high interest rates, the consumption of Colombian households is increasingly 'defensive' and experiential, which is being taken advantage of by 'hard discount' stores such as D1 or Ara.


In fact, according to a NielsenIQ study on consumer buying behavior, mass consumption registered significant changes with a prominent protagonist: the 'hard discounters' channel, which registered a 12.1% increase in volume compared to 2022, while other channels have experienced contractions.


According to data compiled by NIQ, total mass consumption in Colombia maintained a slight negative trend in volume of -0.3% in 2023 compared to the previous year. However, this slight decline was offset by the performance of the hard discount channel.


WHAT'S DRIVING THIS GROWTH?

In general terms, the analysis reveals that products in the basic basket such as milk, oil, toilet paper, deli meats and laundry detergent are the main contributors to the positive dynamics of the format.


75% of the channel's growth is attributed to higher consumption by its households, which translates into higher purchases in the FMCG categories during 2023. This shows how households are spending more and more on this channel, expanding the size of the shopping cart.


In addition, the remaining 25% of the channel's growth is explained by households that previously made their purchases in neighborhood stores, supermarkets and/or drugstores, but during 2023 transferred their consumption to discounters.


"This phenomenon is neither temporary nor new, but reflects a consolidated trend. The hard discount channel has become the second most penetrated channel in Colombia, with an impressive 96% of households making purchases in this format during 2023," explains Camilo Escobar, Director of Customer Success for NielsenIQ Colombia.


THE GROWTH OF HARD DISCOUNTERS

According to Nielsen, the channel's growth has been exponential in the last decade, going from concentrating only 2% of mass consumption value spending in Colombian households in 2014 to representing a remarkable 25% in 2023.


This expansion has had a significant impact on other formats, such as chain supermarkets and neighborhood stores, which are the most affected in the loss of spending within the country's households.


"In summary, the Hard Discounters 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," said Escobar, noting that 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.






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