top of page
Search

South-America: Hard discount revolutionizes retail in Latin America

Discount Retail Chain will advance rapidly in South America. According to the Deloitte study "The advance of the hard discount. Evolution and perspectives towards 2030", this retail format already concentrates more than 30% of modern retail in Mexico and aims to dominate up to 40% of the regional market by the end of the decade.


Just a decade ago, the phenomenon of hard discount stores seemed limited to Europe, with giants such as Lidl and Aldi dominating the market in countries such as Germany and France. Today, however, the story is different: Latin America not only adopted the model, but accelerated it and transformed it into a pillar of daily consumption.


According to the Deloitte study, The Advance of the Hard Discount. Evolution and prospects Towards 2030, the region is experiencing a true retail revolution that impacts both consumers and large chains. Colombia, Peru, Mexico and Chile concentrate the fastest progress, although the model is already beginning to permeate Central America and the Caribbean.


What is the hard discount?

The Deloitte study explains that the hard discount is a retail format based on the sale of basic products at significantly lower prices than in traditional supermarkets, without depending on promotions or loyalty programs.

To achieve this, it is based on four strategic axes:

  • Operational simplicity: small shops, no additional services.

  • Obsessive cost reduction: optimized logistics and cost control.

  • Limited and focused assortment: prioritizing essential categories.

  • Own brands: with a good price-quality ratio to legitimise the perception of value.


The model was born in Germany further tested and adapted in Turkey, and landed in Latin America in 2005 with Tiendas 3B in Mexico and later in 2009 with the opening of D1 Stores in Colombia, and since then it has shown that "less is more" can also be a powerful expansion strategy.


Hard Data: Growth in the Region

According to the Deloitte report, the phenomenon reached a startling magnitude in just over a decade:

  • Colombia: Hard discount stores accounted for 21% of the share in supermarkets in March 2022. Tiendas D1 displaced Almacenes Éxito as the leader in retail sales in 2021, with a growth of 32% that year. Today, D1 has nearly 4,000 stores.

  • Peru: In 2022, more than 600 discount stores exceeded 11% of modern channel sales. The Mass chain reached more than a thousand stores in record time, and its owner Intercorp is already exporting the model to Chile.

  • Mexico: the most surprising case. In 2022, hard discounting represented just 2.3% of grocery sales, but today it dominates 30.5% of modern retail. Between 2022 and 2024, sales in the sector went from $29.707 billion to $38.864 billion, according to GlobalData figures cited in the Deloitte study.

  • Brazil: the hard discount mutated into an attack format (a mixture of wholesale and self-service). Chains such as Assaí and Atacadão grew by double digits. However, not all bets are prospering: Spain's DIA left the country in 2023 after failing to achieve profitability.


Mexico: from laggard to regional protagonist

Although the Deloitte study indicates that Colombia leads in penetration, Mexico has become the most dynamic market with the greatest potential.


The Mexican case is marked by an aggressive expansion of local players:

  • 3B stores: founded in 2005, they were consolidated after a dizzying growth in recent years. In the third quarter of 2023, 191 branches opened, with plans to reach 20,000 stores through investments ranging between 1,400 and 1,600 million pesos per year. In 2023 they reported revenues of 41,090 million pesos (+29.4% compared to 2022).

  • Neto Stores: operate with more than 1,700 branches in at least 20 states of the country.

  • Bara, from FEMSA: The company announced that it will accelerate its expansion to compete directly with discounters.

  • Walmart's Bodega Aurrerá: represents 80% of its stores in Mexico, and in 2022 received 40% of its capital budget (27,600 million pesos) for remodeling and expansion.


According to Deloitte, Mexico's success is explained by a combination of factors: high price sensitivity, persistent informality and a cautious consumer who prioritizes value over experience.


The keys to the model, according to Deloitte

The report highlights three factors that have been essential for the hard discount to become a model of success:

  1. Accelerated territorial expansion: chains grow "in a spot", opening stores close to each other to take advantage of economies of scale.

  2. Customer proximity: settling in popular neighbourhoods and small municipalities, taking ground away from traditional neighbourhood stores.

  3. Legitimization of cheapness: thanks to the development of quality own brands, the stigma that "low price equals poor quality" was broken.


Opportunities and challenges towards 2030

Deloitte projects that the hard discount could capture between 15% and 40% of the retail market in different Latin American countries by the end of the decade.

The clearest opportunities are:

  • Expansion to rural and semi-rural areas.

  • Digitalization and technological adoption to improve logistics and productivity.

  • Sustainability and energy efficiency as a competitive advantage.


However, the study warns that the model is not without risks: it requires large initial investments, and if the minimum scale is not achieved, it may fail (as in the case of DIA in Brazil).


According to Deloitte, the hard discount went from being a "niche format" to becoming a strategic pillar of Latin American retail. It has changed shopping habits, forced the giants of the sector to reinvent themselves and opened up new investment opportunities.

The slogan of "good, beautiful and cheap" is no longer a cliché to become the winning retail strategy of the decade.



ree

Comments

bottom of page