DIA’s emerging markets business continued to grow in 2015, despite economic stagnation in Brazil, Argentina and China. Gross under-banner sales in this region rose by 20% in constant-currency terms to €3.81 billion. Adjusted EBITDA was 33% higher in constant-currency terms at €109.1 million, thanks to the ambitious efficiency programme rolled out in Brazil, compelling sales momentum in Argentina and ongoing operational fine-tuning in Shanghai.
In Argentina, revenue jumped by 33.2% in constant-currency terms, shaped by the ongoing effort to bring the company’s supermarkets closer to the end customer–87% of its stores are now neighbourhood stores–and to enhance the shopping experience by prioritising not only what its customers buy but also how they shop.
Against the backdrop of intense competition and new customer demands, the company continued to update its image and product range in the neighbourhood segment. In parallel, over half of the larger-scale stores have already introduced the full perishables range, adding over 400 SKUs to their product assortments. The company’s market share in Argentina rose by 54 basis points to 12.59%.
‘Experts in Savings’ has emerged as a commercial phenomenon in Argentina, spawning a television show, TV Experts, in 2015.
In Brazil, the business was shaped by a difficult macroeconomic environment. Despite GDP contraction of over 3% and a spike in unemployment, most notably in the big cities, DIA gave further evidence of the solidity of its business model, registering double-digit sales growth in constant currency terms (+11.6%); this growth was eroded in euro terms on account of sharp currency depreciation in Brazil.
On the growth front, the company opened more new stores in this market in 2015 than ever before, inaugurating 130 new stores in total, driving growth of 31 basis points in its market share to 7.15% in tandem, according to Nielsen.
The franchise is one of the cornerstones of growth in this market. In 2015, the company continued to develop the master franchise agreement in the state of Bahía and achieved the franchising Seal of Excellence for the first time, helping to consolidate the brand as a benchmark franchisor.
DIA China continued to fine-tune its neighbourhood store model, a format without precedent in Asia, in a bid to make it more profitable. The group enhanced the shopping experience by making the stores even simpler and easily replicable, adding background music, an aisle with special offers and a new dedicated household and personal care product section. These novelties combined to drive local-currency sales growth of 2.3%.
Another new development in 2015 was the introduction of an imported products section (olive oil, cheese, etc.), selling name brand products as well as products carrying the group’s gourmet private-label brand, Delicious. These imported products also found their way on the Alibaba Group’s B2C (business to customer) platform, T-Mall Global, in 2015. For now a little over 100 products will be available on this e-commerce platform.
In parallel, DIA rolled out its own direct e-commerce platform in China at www.diatiantian.com.cn. Lastly, DIA China created a mobile app which enables shoppers to shop directly from the app, without having to go to the company’s website.