Retailing in the Week Ahead, Week 10, 2019

There are at least two types of salsa. The first is something you add to corn chips (crisps) to spice up an evening in front of the television or out on the town with friends. The second is a way of dancing, some say a way of life, invented in Cali, Colombia, the world capital of modern salsa dancing.

Kantar Consulting had the chance to visit Colombia this month and can give you an update on the ‘discounter salsa’ revolution taking place in Colombia. What we mean by ‘salsa’ in this context is four very good retailers borrowing elements of the global discounter model, adding some spice to it, and making it their own. Let’s introduce you to the four dancers:

  1. ‘The Parrot’ – ARA. Using the parrot as its logo, Tiendas Ara is a soft-discount grocery chain that goes by the motto ‘Alegría al mejor precio’ – loosely translated as ‘Fun at great prices’. European readers should be aware that ARA is part of the Jerónimo Martins empire which includes grocery discount cousins Biedronka in Poland and Pingo Doce in Portugal.
  2. ‘The Street Vendor’ – JUSTO Y BUENO. Using the ‘street market’ as its logo, Justo y Bueno is a hard discount chain, modelled after the smaller-version hard discount formats such as BIM in Turkey. The company is a recent addition to the Colombian market that emerged as a result of boardroom tensions between managers and owners of Colombia’s largest discounter – Tiendas ‘D1’. Justo y Bueno has made an immediate impact in just a short space of time, apparently having the benefit of learning from past mistakes.
  3. ‘The Truth’ – D1. Under the slogan, “Productos Extraordinarios” (Extraordinary Products), D1 regularly publishes its “truths” in retail across in-store marketing and store circulars/flyers. D1 is the oldest and best-established of Colombia’s discounters and is also the most secretive. It is safe to say they are not pleased with the newcomers’ success, but probably benefit from the comparisons where D1 regularly emerges as having the lowest-priced basket for basic commodity products in Colombia. 
  4. ‘Northern Wind’ – DOLLARCITY. Dollarcity uses its corporate green and gold colours to make an impression. The company is associated with the Dollarama group from Canada and is blowing south into new parts of Colombia at a fast pace. In addition to Colombia, Dollarama has stores in El Salvador and Guatemala. The company runs a classic dollar-store layout with most items designed for low rounded price points of 2500, 5000, 6000, 7000, 10000 Colombian Pesos (similar to $1, $1.50, $2, $3 price points).

As these four businesses take to the dance floor, the results are predictable. They have a three-step motion to their performance:

  1. Open lots of new stores
  2. Work hard at logistical and sourcing efficiencies
  3. Invest in more stores and better-quality product assortment

The results are astonishing. Let’s look at store counts. The channel in Colombia is currently adding net 400 new stores per year.

Discounter Banner

# Stores 2014

# Stores 2018

Stores added (per year)




642 (160)




456 (118)

Justo Y Bueno



438 (109)




75 (15)




1,611 (403)


With this momentum, particularly among discounters that prefer to establish private label as the main form of communication with shoppers, the results are predictable. Let’s review:

Key Performance Indicator

2014 Value

2018 Value

Private Label Share of FMCG Purchases



Discounter share of FMCG trade



Discounter household penetration




Conclusions – what can we learn from the Sensational Salsa?

Many FMCG branded manufacturers ask two questions about the global success of discounters. First, where will discounters move next and be successful? Second, how do we prepare our local teams to manage the discounters while it is still ‘easy’ to do so?

The example of Colombia should help answer these questions. Firstly, success normally depends on at least two, more often four, discounters all chasing each other and competing against one another. For example, BIM, Turkey’s most successful discounter, has opened stores in Egypt and Morocco, but the ‘energy’ is not the same. The reasoning is simple – BIM does not compete head-to-head at a significant level in these countries and, therefore, some of the excitement is lacking. Compare this to Biedronka in Poland, where the company has to compete against Aldi Nord, Lidl, Netto, and now Action. This creates lots of positive energy for consumers.

Secondly, the best way to prepare teams is to share best practices globally and connect these teams to the countries that inspire the discounter. Koba, the private equity group that owns D1, is connected to the same investors and advisors that run BIM in Turkey. Get your Turkish teams speaking to your Colombian teams. Likewise, Mercarderias, the owner of Justo y Bueno, was partially founded by some of the people that got D1 up and running, so similar examples can work. ARA is run by the same group that operates Biedronka and Pingo Doce, so get Colombia speaking to Portugal and Poland. This is a similar story with Canada, Colombia, El Salvador and Guatemala in relation to Dollarama/Dollarcity.

We generally find that proactive engagement when discounters first arrive works better than waiting for them to become the only channel of growth in the market. Get ready early and stay strong. Branded suppliers will never feel ‘comfortable’ with the success of these business models.

With that, as always, we encourage you to click on links to some other great pieces of work published on Retail IQ in Week 9:

In addition, if you get a chance, please share your thoughts or questions on ‘Salsa’, or any other topic. Good luck in the week ahead. 


Ray Gaul – and @KantarConsulting or @RayGaul on Twitter plus LinkedIn.

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