3.2The 2PF formula: the key to success
Proximity, price and the franchise are the three factors that, combined, comprise the backbone articulating the DIA Group’s business model. Thanks to the 2PF prescription–in turn associated with other attributes such as innovation, the private-label brands and the Club DIA loyalty programme–the company is able to satisfy the demands of over 40 million customers, create value for its shareholders and generate social progress and well-being for franchisees, employees and suppliers.
The 2PF formula
In recent years, DIA has cemented its position as the category leader in neighbourhood shopping, offering customers easy access to their daily product requirements, close to home, saving them time and money.
In order to build its leadership position in this segment, catering to consumers’ current shopping habits, the company has been adding to its store network–the store base currently stands at over 7,700–and focusing its investment effort on continually renewing its retail channels to in order to drive sales growth.
In the wake of intense diversification, initiated in 2013, DIA is currently a multi-format, multi-banner group with four different neighbourhood supermarket formats (DIA Market, La Plaza de DIA, El Árbol, Minipreço Market), two classes of stores targeted at rural populations (Cada DIA and Mais Perto) and a dedicated health and personal care (HPC) chain, Clarel. At year-end 2105, these neighbourhood formats accounted for 86% of the group’s establishments. Its other formats include its larger-format suburban supermarkets, DIA Maxi (Minipreço Family in Portugal) and its cash & carry format, Max Descuento.
In its quest to get ever closer to its customers, the company has been building an online ecosystem that currently presents tremendous upside. Among the milestones punctuating its gradual digital transformation, the deployment of DIA’s e-commerce platform in Spain and China, the rollout of the Clarel website, the digitalisation of its discount coupons and the development of flash sales on a dedicated platform (oportunidades.dia.com) stand out. In addition, DIA is strategically committed to omni-channel retailing and assortment diversification away from food.
DIA is strategically committed to omni-channel retailing and assortment diversification away from food.
One of the attributes that sets DIA apart is price. The company is associated with unbeatable prices. It has built this image thanks to a culture of cost efficiency which it is capable of passing along to end prices, all of which underpinned by a simple, innovative and flexible supply chain.
This price image has been nurtured in particular by its private-label brands, which enable the company to offer shoppers quality products at unmatched prices. DIA was the first retailer to launch a private label in Spain in 1984; since then, its DIA brand has become its supermarkets’ hallmark and calling card. In 2013, the group began to develop new brands in response to emerging customer needs. Today its private-label portfolio has been rounded out with Bonté (personal care), Baby Smile and Junior Smile (infant and toddler care), Basic Cosmetics (beauty products) and AS (pet care).
The DIA Club loyalty programme is another cornerstone of the company’s privileged price positioning. Club members get access to over 250 exclusively-priced products, discount coupons and even the possibility of deferring payments weekly or monthly. In parallel, the programme gives the company unique insight into customer behaviour and helps it to formulate sales plans with its suppliers that are more cost-effective and beneficial for all.
The franchise is an essential component of DIA’s business model and is crucial to its strategy of profitable growth underpinned by proximity and price. The group fosters the franchise model because it believes it is the best operating model for excelling in the neighbourhood shopping segment.
For DIA, its franchisees are the brand’s best ambassadors, as their commitment and market knowledge deliver customer satisfaction, while creating wealth for the DIA business as a whole and for the broader business community. In exchange, the company can offer them its know-how, brand equity and logistical efficiency.
At year-end 2015, franchised establishments accounted for 47.9% of all group stores and 61.1% of the DIA store network.
The ultimate goal of DIA’s effort to make its retail offering more attractive by leveraging the 2PF formula is customer satisfaction. DIA’s customers are ultimately the first to benefit from format and brand innovation, product assortment diversification and gradual specialisation, factors that have converted the DIA Group into a truly multi-format, multi-brand multinational.
In 2015, DIA executed several projects in several countries designed to enhance the shopping experience. Among these, the customer satisfaction surveys in Spain, the viral marketing campaigns in Brazil, the ‘Experts in Saving’ initiative in Argentina and the commitment to online expansion in China stand out.