8.1A sustainable value chain
DIA works with 4,687 suppliers worldwide. These stakeholders play a crucial role in the company’s proposition of offering unbeatable value for money. This figure marks growth of 24% from 2014, due largely to retail format innovation and the strategic commitment to an omni-channel presence; these strategic lines of initiative are expanding the scope for working with new suppliers and launching new products.
Purchases from name brand suppliers exceeded €4.5 billion in 2015, year-on-year growth of 16%. Purchases from private-label brand suppliers, meanwhile, topped €3.3 billion, up a slight 1.9% from 2014. The mix between name brand and private label brands was 57% vs. 53%, respectively.
In 2015, the development of new SKUs for DIA stores, the integration of El Árbol, the launch of La Plaza de DIA–the new format specialised in fresh produce -, expansion of the Clarel network and orientation of the online business towards non-food products drove growth in the business opportunities for DIA’s suppliers and opened the door to business relations with new companies.
Format innovation coupled with product diversification created new business opportunities for suppliers
DIA’s bargaining position was reinforced in 2015 by the creation, together with Intermarché, of a purchasing pool in Portugal known as CINDIA, the agreement struck with Eroski to improve negotiation terms with the major name brand product suppliers and an international alliance with Casino that will reinforce private-label product development, among other things. All of these arrangements are framed by the unwavering ultimate goal of providing customers with unbeatable prices in all of its business markets.
CINDIA: a new purchasing pool in Portugal
In May, DIA joined forces with Intermarché–a supermarket group encompassing different independent chains–to create CINDIA, a new centralised purchasing pool vis-a-vis the largest name brand suppliers in Portugal. Carved out from the scope of this agreement are negotiations with SMEs and suppliers of fresh agricultural and fish produce.
The goal of this alliance is to enhance purchasing terms and conditions to compete with Portugal’s top two retailers while offering suppliers more compelling services in return.
Agreement with Eroski
Similarly in a bid to offer customers unbeatable prices by joining forces, DIA and Eroski signed a new collaboration agreement in June to improve bargaining terms relative to the major suppliers of Spanish and international branded products. Traditional fresh produce suppliers and small-scale local producers are similarly carved out of this agreement.
Alliance with Casino
At the end of last November the company struck an international agreement with the Casino Group with a view to enhancing competitiveness vis-a-vis major suppliers. This agreement materialised in the creation of ICDC Services in 2016, one of the largest private label negotiation platforms in Europe; it stands to benefit the customers of a large commercial network operating in multiple countries.
This alliance encompasses name brands and private-label brands and is expected to cover 50% of both companies’ private-label purchases in Europe in the future.
The parties to the alliance with Intermarché and the agreements with Eroski and Casino all retain totally independent sales policies in respect of each other.
DIA World Trade
DIA set up DIA World Trade in 2012 with the aim of coordinating relations with the group’s suppliers based abroad. A team based in Geneva handles DIA’s relationship with the main international suppliers framed by coordination and global monitoring designed to foster shared and long-lasting business propitious to the implementation and execution of increasingly efficient sales initiatives.
DWT’s role is to negotiate global agreements above those already agreed with these same suppliers at a more local level; it shares information monthly and a broader vision of the supply chain, sales and new product innovation/introduction through a web portal for internal use only.
In 2015, DIA worked with 108 of these major international suppliers which represent 52% of all name brand purchases made by DIA.