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TU DISPOSITIVO ES MUY PEQUEÑO,
PRUEBA CON UNO MÁS GRANDE

Logotipo Supermercados Día Memoria Anual 2015
02 Consolidated directors´ report

2.1Entity profile

1.1. Organizational Structure

Distribuidora Internacional de Alimentación, S.A. and subsidiaries form the DIA Group.

1.1.1. Corporate Structure

Distribuidora Internacional de Alimentación, S.A. owns, directly or indirectly, 100% of all its subsidiaries except for Compañía Gallega de Supermercados, S.A., of which it owns 94.24% and ICDC, of which it owns 50%. Likewise, the Company owns 50% of the assets and liabilities of the group of companies called CINDIA, A.C.E.

The companies that make up the DIA Group are as follows:

Estructura societaria

The DIA Group’s main activity is the retail sale of food products and any other consumer products, through owned or franchised stores.

DIA World Trade, S.A. is located in Geneva, Switzerland, and its main activity is the provision of services to suppliers of DIA Group companies.

Finandia E.F.C., S.A.U., is a Spanish credit company that finances customers’ commercial transactions in DIA stores in Spain with the “ClubDIA” card.

Distribuidora Internacional, S.A. is located in Buenos Aires, Argentina, and its main activity is services consultancy.

The group of companies CINDIA, A.C.E and the company ICDC have been set up together with the companies Intermarché and Casino respectively to jointly buy goods in Portugal and Geneva, Switzerland.

E-Shopping creates, maintains and operates sites and internet portals for the sale of products and services.

The company DBZ Administraçao, Gestao de ativos e Serviços Imobiliarios Ltda., domiciled in Sao Paulo, is involved in real estate management for DIA Brazil.

1.1.2. Board of Directors

Distribuidora Internacional de Alimentación, S.A., as of 31 December 2015, is managed and governed by a Board of Directors that is made up of nine members, of which seven are independent, one is executive and one is classified as “other external director”.

The composition of the Board of Directors, as of 31 December 2015, is as follows:

  • Ana María Llopis Rivas: Non-executive chairwoman qualified as “other external director”.

  • Mariano Martín Mampaso: Vice-chairman qualified as independent.

  • Ricardo Currás de Don Pablos: CEO qualified as executive.

  • Julián Díaz González:Director qualified as independent.

  • Richard Golding: Director qualified as independent.

  • Pierre Cuilleret: Director qualified as independent.

  • Rosalía Portela de Pablo: Director qualified as independent.

  • Antonio Urcelay Alonso: Director qualified as independent.

  • Juan María Nin Génova: Director qualified as independent.

On 17 June 2015, Nadra Moussalem and Nicolas Brunel ceased to be proprietary directors as a consequence of the sale of the stake that their companies had in DIA.

Juan María Nin Génova joined the Board of Directors on 15 October 2015.

The overall function of the Board of Directors is the supervision and consideration of matters of particular importance to the Group. As a general rule, it entrusts the Group’s ordinary management to the CEO and Senior Management (see point 1.1.3).

The main responsibilities of the Board of Directors include the following:

a) approval of the general policies and strategies of the Company and the organisation necessary to implement them, including the following:
  • (i) the strategic or business plan, as well as annual management objectives and the budget;

  • (ii) the investment and financing policy;

  • (iii) the determination of Company’s fiscal strategy;

  • (iv) the definition of the structure of the corporate group and the coordination, within the legal limits, of the group’s general strategy in the interest of the Company and the companies comprising it;

  • (v) the corporate governance policy of the Company and its group;

  • (vi) the corporate social responsibility policy;

  • (vii) the supervision of the performance of the board committees and acts carried out by delegated bodies and senior managers;

  • (viii) the policy for compensation and evaluation of the management team’s performance;

  • (ix) the policy for control and management of risk, including fiscal risks, and the supervision of information and control systems, identifying the Company’s main risks and organising the appropriate internal control and reporting systems;

  • (x) Defining the basis for the corporate organisation, in order to ensure greater efficiency thereof and effective supervision by the board of directors;

  • (xi) setting and implementing the dividend and treasury share policies, within the framework of the authorisations of the general meeting.

b) approval of the following operating decisions:
  • (i) convening the general shareholders meeting and drafting the agenda and the proposals for resolutions;

  • (ii) appointing directors by way of co-option and referring proposals to the general meeting regarding appointment, ratification, re-election and removal of directors, as well as the acceptance of director resignations;

  • (iii) appointing and renewing internal positions on the board of directors, and the members of and positions of the committees constituted within the board;

  • (iv) delegating authority to any of its members, under the terms established by law and the articles of association, and revocation thereof;

  • (v) appointing and removing executive directors and senior managers reporting to the board, as well as establishing the basic conditions of their contracts, including their remuneration;

  • (vi) granting an authorisation or exemption of the obligations deriving from the duty of loyalty, when the granting of such authorisation lies with the board;

  • (vii) preparing the financial statements, management report and proposal for application of profits of the Company, as well as the consolidated financial statements and management report, and their submission to the general meeting for approval;

  • (viii) approving the financial information that the Company, being a listed company, must periodically disclose;

  • (ix) preparing the annual corporate governance report and the annual report on directors’ remuneration, both to be presented to the general meeting and the other reports and documents that must be submitted to it;

  • (x) approving the amendment of this regulation;

  • (xi) proposing to the Company’s general shareholders meeting the amendments to the regulation of the general shareholders meeting it deems appropriate to ensure the exercise of shareholders’ rights of participation;

  • (xii) decisions concerning the remuneration of board members, in accordance with the articles of association and, if applicable, the remuneration policy as approved by the general meeting;

  • (xiii) fixing, in the case of inside directors, any additional consideration for their management duties and other terms of their contracts;

  • (xiv) establishing strategic alliances with industrial, commercial or financial groups, domestic or foreign;

  • (xv) investments, divestitures or transactions of all kinds (including financing transactions) that, by reason of their high amount or special characteristics, are of a strategic nature or special tax risks, including industrial, commercial and financial transactions of particular importance, unless (i) they have been approved in the annual budget, or (ii) approval thereof corresponds to the general meeting;

  • (xvi) creating or acquiring shares in special purpose vehicles or entities resident in jurisdictions considered to be tax havens, and any other transactions or operations of a comparable nature the complexity of which might impair the transparency of the Company and its group, after a report from the audit and compliance committee;

  • (xvii) the powers that the general meeting vested on the board of directors, save for those that the latter has been expressly authorised to subdelegate; and

  • (xviii) the preparation of any type of report required by law, when the operation to which the report refers cannot be delegated; and

(c) approval of the transactions entered into by the Company or companies of its group with directors, as defined by the Act, or with shareholders who own, individually or jointly, a significant stake, including shareholders represented in the board of directors of the Company or companies of its group or individuals linked to them (“Related Party Transactions”). The directors concerned or who represent or are linked to the relevant shareholders must refrain from participating in the deliberation and voting of the resolution in question.

Nonetheless, transactions that simultaneously satisfy the three following conditions will not require board authorisation:

  • those governed by standard contracts applied on an across-the-board basis to a large number of customers;

  • those entered into at market prices or rates, generally fixed by the person supplying the goods or services; and

  • where the amount of the transaction does not exceed one per cent (1%) of the Company’s annual revenues.

The Board of Directors has appointed an audit and compliance Committee and a nominating and compensation Committee.

The main functions of the audit and compliance Committee are as follows:

  • (i) report to the general shareholders meeting in relation to issues within the scope of its responsibilities;

  • (ii) supervise and review the preparation process and presentation of the required financial information which, in accordance with article 35 of the Securities Market Act, is to be provided by the board to the markets and their supervisory bodies, and, in general, ensure compliance with the legal requirements in this area, the appropriate delimitation of the scope of consolidation and the proper application of generally accepted accounting principles, as well as report on proposals for changes in accounting principles and standards suggested by management;

  • (iii) periodically supervise and review the effectiveness of the Company’s internal control and financial and non-financial risk management systems, including fiscal risks, verifying the appropriateness and completeness thereof and proposing the selection, appointment, re-election and removal of the responsible therefor; proposing the budget for such services, approving the orientation and working plans, ensuring that the activity is focused mainly on risks relevant to the Company, and verifying that the members of the management team take into account the conclusions and recommendations in its reports; and discussing with the Company’s auditors such significant weaknesses in the internal control system as may be discovered in the auditing process;

  • (iv) coordinate the process for the reporting of non-financial and diversity information, in accordance with applicable regulations and international reference standards;

  • (v) ensure the independence of the unit that undertakes the internal audit; propose the selection, appointment, re-election and dismissal of the person responsible for the internal audit service; propose the budget for said service; approve the orientation and the working plans of same, ensuring that its activity is focused mainly on risks relevant to the company; receive periodical information about its activities; and verify that senior management takes into account the conclusions and recommendations of its reports;

  • (vi) submit to the board of directors proposals for the selection, appointment, re-election and substitution of the outside account auditors, as well as the conditions for hiring them, and regularly gather information from them about the auditing plan and its execution, preserving their independence in the exercise of their duties;

  • (vii) establish the appropriate relationships with the outside auditors and receive information regarding questions that may compromise their independence, for examination by the committee, and those of anyone else involved in the process of auditing accounts, and such other communications as may be contemplated in the legislation regarding auditing and audit standards. In any event, they must receive from the outside auditors an annual declaration of their independence of the entity or entities directly or indirectly related to this one, and information on additional services of any kind provided to these entities and the corresponding fees received by the aforesaid outside auditors, or by persons or entities related thereto, in accordance with the provisions of the legislation governing the auditing of accounts. In the event of resignation of the outside auditor, the committee shall examine the circumstances leading to said resignation. It shall ensure that the Company communicates the change of auditor as a relevant fact to the CNMV and accompanies said notification with a declaration regarding the possible existence of disagreement with the outgoing auditor and, if any, the content of such disagreement;

  • (viii) annually, prior to the issuing of the audit report, publish a report stating an opinion regarding the independence of the auditors. This report must comprise, in any event, the assessment of the provision of additional services referred to in the point above, individually and globally considered, different from the legal audit and in relation to the independence system or the legal provisions on auditing;

  • (ix) serve as a communications channel between the board of directors and the auditors; evaluate the results of each audit and the responses of the management team to its recommendations and mediate in the event of disputes between the former and the latter in relation to the principles and criteria applicable in the preparation of the Financial statements, and examine the circumstances, if any, behind the resignation of the auditor. The committee shall ensure that the outside auditor holds a meeting annually with the entire board of directors to inform it of the work carried out and the evolution of the accounting situation and the risks the company faces;

  • (x) report to the board beforehand regarding any matters foreseen by law, the articles of association, the board of directors regulations, and, in particular, on:

    • the financial information that the Company must periodically disclose,

    • the creation or acquisition of shares in entities with special purposes or domiciled in countries or territories that are considered to be tax havens;

  • (xi) supervise the compliance with the rules regarding related party transactions with directors or major shareholders or shareholders represented on the board; in particular, it will report to the board regarding such related party transactions and, in general, regarding transactions that imply or may imply conflicts of interest, for purposes of their approval, and will see to it that information in respect thereof is communicated to the market as required by law;

  • (xii) supervise compliance with internal codes of conduct, in particular the code of conduct for the securities market;

  • (xiii) review the corporate social responsibility policy, ensuring that it is focused on creating value and monitoring the strategy and practices of corporate social responsibility and evaluating the degree of fulfilment;

  • (xiv) supervise the communication strategy and relations with shareholders, investors (including small and medium shareholders) and other stakeholders;

  • (xv) establish an internal mechanism whereby staff can report, confidentially and, if deemed appropriate, anonymously, any irregularities they detect in the course of their duties, in particular financial or accounting irregularities, with potentially serious implications for the Company;

  • (xvi) prepare and update a declaration of ethical values related to the reliability of financial information in compliance with applicable regulations, which will be approved by the board of directors and communicated to all levels within the organisation;

  • (xvii) establish procedures to ensure that the principles of professional integrity and ethics are respected, as well as measures to identify and correct departures from those values within the organisation;

  • (xviii) the committee shall be informed of operations planned by the Company which produce structural or corporate modifications for their analysis and for a prior report to the board of directors on their economic conditions, their accounting effect and, especially, on the exchange ratio proposed, if any; and

  • (xix) any others that may be attributed to it by law and other regulations applicable to the Company.

The members of the audit and compliance Committee are Richard Golding, chairperson, and Julián Diaz González, Rosalía Portela de Pablo and Juan María Nin Génova as members.

The main functions of the nominating and compensation Committee are as follows:

  • (i) evaluate the competence, knowledge, and experience required on the board. To this end, the committee will determine the functions and skills required for candidates to cover a vacancy, and will evaluate the precise time and dedication in order to carry out their tasks effectively;

  • (ii) make proposals to the board of directors of independent directors to be appointed by co-option or for submission to decision by the general meeting, and proposals for re-election and removal of those directors by the general meeting;

  • (iii) report on proposals for the appointment of other directors to be appointed by co-option or for submission to decision by the general shareholders meeting, and proposals for re-election and removal of those directors by the general meeting;

  • (iv) report to the board on proposals for the appointment, re-election and removal of internal positions within the board of directors of the Company (chairperson, viceperson, lead coordinator, secretary and vice-secretary, if any);

  • (v) report on proposals for the appointment and removal of senior managers and the basic conditions of their contracts;

  • (vi) report to the board on matters of gender diversity and, in particular, seeing to it that procedures for the selection of directors and senior managers do not suffer from an implicit bias preventing the selection of women. In particular, the committee shall set a target for representation on the board for the least represented gender, establishing guidelines to achieve this target;

  • (vii) propose to the board of directors (i) the remuneration policy for directors and senior managers or any other persons performing senior management duties reporting to the board, the committees or the managing director, (ii) the individual compensation of executive directors and the other terms of their contracts, supervising their implementation, and (iii) the basic terms of senior managers’ contracts;

  • (viii) analyse, formulate and periodically review the compensation policy applied to executive directors and the management team, including share compensation schemes and the application thereof, and guaranteeing that it is proportionate to the compensation paid to other directors and members of the management team and other personnel of the Company;

  • (ix) oversee compliance with the compensation policy set by the Company;

  • (x) examine and organise the succession plan for the Company’s chairman of the board and the chief executive officer and, if applicable, suggest proposals to the board of directors to ensure a smooth and organised transition;

  • (xi) generally supervise compliance with the Company’s applicable corporate governance rules, including a periodical evaluation of the Company’s corporate governance system, such that it achieves its mission of promoting social interest and to takes into account, as appropriate, the legitimate interests of other stakeholders.

  • (xii) report to the shareholders on the performance of its duties, attending the general shareholders meeting for this purpose; and

  • (xiii) assist the board in the preparation of the report on directors’ compensation policy and send the board any other reports on compensation contemplated in this regulation, verifying the information on compensation paid to directors and senior management contained in the different corporate documents, including the annual report on directors’ remuneration.

The members of the nominating and compensation Committee are Mariano Martín Mampaso, chairperson, and Pierre Cuilleret and Antonio Urcelay Alonso as members.

1.1.3. Management Committee

As mentioned in point 1.1.2, the Board of Directors of DIA entrusts CEO Ricardo Currás de Don Pablos as well as the Management Committee, with the ordinary management of the Company, whose members, apart from Ricardo Currás de Don Pablos, are as follows:

  • Diego Cavestany de Dalmases: Executive Manager Operations DIA Spain.

  • Antonio Coto Gutiérrez: Director Executive Manager for Latin America and Partnerships.

  • Juan Cubillo Jordán de Urríes: Business and Merchandise Executive Manager

  • Javier La Calle Villalón: Chief Resources Officer and China Executive

  • Amando Sánchez Falcón: Chief Services Officer and Portugal Executive

DIA Group is managed by a team with extensive experience in the retail sector and with an average tenure in the DIA Company of more than 20 years.

1.1.4. Segments

For internal management purposes, the Group is organised into business units, based on the countries in which it operates, and has two reporting segments:

Segment 1, Iberia, which includes Spain, Portugal and Switzerland (DWT, ICDC). Spain and Portugal are the oldest countries of the Group and serve as a model for the other countries. They have a very high level of profitability and are very similar. In Switzerland are located DWT, whose principal activity is the provision of services to suppliers of DIA Group companies and ICDC that jointly purchases merchandise with Casino.

Segment 2, Emerging Countries, which includes Brazil, Argentina and China. These countries are characterized by significant potential for expansion.

Management monitors the operating results of its business units separately in order to make decisions on resource allocation and performance assessment.

1.2. Operation

The DIA Group is one of the world’s leading food distributors, specializing in the proximity discount segment, and is present in five countries: Spain, Portugal, Brazil, Argentina and China, with 7,718 stores (owned or franchises) across different formats such as DIA Market, DIA Maxi, Clarel, El Árbol, La Plaza de DIA, DIA Fresh, Cada DIA, Minipreço and Mais Perto.

1.2.1. Strategy

DIA Group wants to be the leading distributor in the 2P (Price and Proximity) segment. According to several surveys, price and proximity are the two most important factors for customers when it comes to choosing which store to go to for their food purchases.

Therefore, the DIA Group’s strategy is based on the following:

  • (a) Leadership in the neighbourhood segment: The DIA Group boasts a unique business model that has allowed it to become the unrivalled specialist in the neighbourhood segment. This model implies the ability to cater to each shopper’s everyday grocery requirements without having to travel far, saving money and time for shoppers in the process. Underpinned by the tenets of sustainable mobility and integration in the urban environment, the sales model makes life easier and is environmentally friendly, while helping to preserve existing urban cohesion and the dynamism of the broader retail trade.

  • More than 86% of the stores operated by DIA Group are in urban and rural areas under the following banners: DIA Market, DIA Fresh, Clarel, El Árbol, La Plaza de DIA, Cada DIA, Minipreço and Mais Perto, and offering the best prices in the area of influence.

    To encourage daily shopping, DIA Market, La Plaza de DIA, El Árbol and DIA Fresh stores offer more perishable products as produce quality is of increasing importance to consumers. The DIA Group responds swiftly to its customers’ demands, which is why its stores are devoting more shelf space and prominence to produce. The use of light and colour in our stores facilitates the selection of these products. The aim is to be the player to beat in perishables: fruit, vegetables and bakery area offering freshly baked bread and pastries) are the strengths that the DIA Group is actively developing. Furthermore, El Árbol and La Plaza de DIA stores stand out in the assisted sale of meat, cold meats and fish.

  • (b) Price leadership: Boosting shoppers’ purchasing power by offering the best quality at the best price in the market makes the DIA Group aim to continuously improve its efficiency, resulting in its undisputed leadership in prices. Quality food that everyone can afford is a priority for the company. The DIA Group has the best price image in its most important markets: Spain, Portugal, Brazil and Argentina.

  • (c) A quality own brand: The own brand is essential to achieve a good price image and represent a single link with consumers, helping to make them loyal to our stores. The DIA Group’s own brand is constantly evolving to better adapt to customers’ needs, providing them with an increasing amount of information, and innovating with the aim of achieving the same quality as the leading product in the market (or even beating it on quality), at an unbeatable price.

  • On average, own brand products account for around 50% of sales, although in emerging countries this percentage is lower. Even so, in all our markets, the percentage of own brand sales is well above the average of its own market.

    DIA’s private-label catalogue includes 7,500 SKUs. It is an international range (present in five countries) which meets the requirements of a broad customer base with differing tastes and sensitivities.

    The company boasts an extensive portfolio of brands. Thanks to these brands, and by offering the most comprehensive ranges at unbeatable prices, shoppers recognise DIA as a genuine specialist in a broad number of product categories.

    In addition to the DIA brand, the company sells products under other private-label brands such as Bonté, specialised in personal care and hygiene products, Basic Cosmetics, focused on the make-up and cosmetics segments, BabySmile, devoted to all things baby-related, and AS, the pet food brand.

  • (d) A single loyalty program: the “ClubDIA” card allows customers to benefit from immediate discounts at the cash desk on more than 300 products. Furthermore, monthly coupons are issued offering additional discounts within a product family, a brand of products or a new product that has recently been launched. The use of these coupons can represent an additional discount of 6% on the ticket purchase value.

  • This tool is critical for the company’s price image and allows it to implement more efficient sales plans with suppliers that are beneficial for all involved.

  • This program was developed entirely by DIA and is one of the most efficient programs in the sector, and has now been implemented in all countries except Brazil, where it is being set up.

  • (e) Low-cost operator: process improvement, continuous reviews, and the constant search for excellence, are part of the DIA Group’s DNA. Efficiency is the best guarantee of sustainability, allowing the company to offer the most competitive prices.

    In order to be efficient while cutting costs, the DIA Group develops all of its strategic software internally, such as the cash desk software, the warehouse management program, and the above-mentioned loyalty program. These programs are designed to better adapt to the characteristics of proximity trade.

    Given that efficiency cannot be achieved without an integrated and optimized logistics system, all merchandise for the stores prepared in DIA warehouses is delivered in a single multi-temperature truck that includes all perishable, frozen, dry and 0+ temperature products. Warehouses are managed using cutting-edge technology such as “voice-picking” (voice-transmitted orders) and radio frequency, which has allowed the transition to a paperless process.

    Furthermore, in the stores, everything is designed to optimize employees’ tasks, starting with product allocation facilitated by packaging and conditioning. At the cash desks, prices are scanned faster and more easily thanks to bioptic scanners, as barcodes are printed in several places on each product and keyboards are optimized by removing unnecessary keys and enlarging the most commonly used ones.

    The organisation is focused on efficiency, allowing it to lower costs and offer the best prices to customers.

  • (f) The franchise: The DIA Group’s track record in the design of an unrivalled business model is transferrable to a network of franchises giving the franchisee the opportunity to be part of a large commercial network belonging to the leader in proximity. The flexibility of the franchise model and the proximity of the franchisee to the end customer facilitate the provision of a personalised service, reinforcing the supply of quality products at the lowest prices, thus creating the best neighbourhood model in the marketplace.

  • DIA transfers to its franchisees all its internally generated expertise, covering all aspects of the business, allowing its franchisees to develop a profitable and competitive business.

    Accordingly, the franchise model is suitable to manage proximity stores and is a key factor to improve and strengthen the company’s commercial proposition.

  • (g) Profitable growth: Since its creation in 1979, the DIA Group has grown steadily. Its international vocation, capacity for innovation and high versatility make it a distance runner who needs to take on new challenges after achieving the goal.

However, the DIA Group is not searching for growth at any price; its focus is on profitable growth. This sometimes implies closing unprofitable businesses with little prospect of improvement, as happened with the sale of the activity in Turkey in 2013 and in France in 2014, and the cessation of the activity of DIA Beijing. On the other hand, the purchase of the Plus stores in Spain at the end of 2007 or the more recent acquisitions of Schlecker in early 2013, El Árbol at the end of 2014 and a large number of Eroski stores in 2015, demonstrate the DIA Group’s focus on growth, even with the purchase and sale of companies as long as they are done at a reasonable price and offer a perfect fit with the company´s strategy.

As for organic growth, the company is not looking for faster growth that could affect the profitability of the emerging countries as happened in Brazil, where profitable growth is ensured by the opening of a new region each year and a half, whilst looking for alternatives with master franchise contracts.

1.2.2. Business Model

DIA Group manages multiformat stores that operate in three types of business: the discount business, the supermarket business and the Clarel business. Stores are either managed in a proprietary manner (COCO Stores – Company Owned Company Operated), or through franchises (FOFO stores – Franchised Owned Franchised Operated or COFO stores – Company Owned Franchised Operated).

  • (a) Store formats:
    The DIA Group’s different store formats are grouped under the following businesses:

    • (a.1) Discount business:
      The discount business is currently the largest unit in terms of volume, representing 78% out of the DIA Group’s total stores worldwide. The main discount store formats operated by the company under this business are as follows:

      • DIA Market: This is the company’s neighbourhood store model and its attempt to get as close as possible to shoppers, bringing them a wide range of products that also represent unbeatable value for money.
        DIA Market stores have floor space of 400-700m2 and are readily adaptable to local demand.
        These stores’ focus on perishables sets them apart, and are ideal for everyday shopping, selling about 2,800 products.

      • DIA Maxi: DIA Maxi stores allow the company to better adapt supply and the level of service offered to customers characterized by making larger and less frequent purchases, even going to the store by car, compared to the neighbourhood segment. This is the DIA Group’s largest store format, with floor space of up to 1,000m2. At DIA Maxi stores, consumers can shop for a wide range of around 3,500 SKUs at the best market prices.

      • DIA Fresh: This commercial model works as a store where fresh products are managed. Within the neighbourhood shopping concept, DIA Fresh is a smaller format, with average floor space of 150m2 and a product offering based on fresh products such as fruit, vegetables and a bakery area (an area offering freshly baked bread and pastries). Another feature of the DIA Fresh store concept is its long opening hours, which allows shoppers to stop by at any time between 09:30am and 9:30pm.

      • Cada DIA: This retail format targets smaller towns, particularly in rural areas. Under this formula, franchise holders can offer DIA products without having to transform their stores into full-blown DIA stores. This is the town’s longstanding store managed by a small shopkeeper.

      • Minipreço: Minipreço is the brand that DIA operates in Portugal. There are convenience stores in urban centres and larger stores in city suburbs. DIA brand products are offered in these stores.

      • Mais Perto: is the most rural concept of DIA store in Portugal, equivalent to the Cada DIA stores in Spain. The stores are located in small towns and are managed by local franchisees, allowing greater proximity to customers.

    • (a.2) Supermarket business:
      This unit represents 7% of total DIA Group stores. The main supermarket formats operated under this business are as follows:

      • El Árbol: DIA Group acquired El Árbol in Spain at the end of October 2014. The stores of El Árbol fall within the concept of proximity and closeness to the customer. With a network of over 400 stores, El Árbol has a strong presence in the regions of Castilla y León, Aragón, Asturias and Galicia. The stores are characterised by their specialisation in fresh products and assisted sales in meat, cold meats and fish.

      • La Plaza de DIA: La Plaza de DIA represents the concept of a traditional nearby family supermarket in which customers can carry out their daily shopping with a wide range of products, with special importance given to fresh produce. This store provides daily solutions for consumers with a wide range of over 5,000 SKUs.

      • Max Descuento: This store specialises in providing services to professionals and self-employed workers in the hotel, catering and food industry and to groups, with a range of over 4,000 SKUs with formats aligned with consumption levels in this channel. The service is supplemented by a telephone sales service, orders by email and distribution to customers through a transport network which optimises the processing time of our customers.

    • (a.3) Clarel Business:
      This business represents 15% of total DIA Group stores.

      • Clarel: is a new store concept. The aim is to become the benchmark neighbourhood store for shoppers looking to buy health, beauty, household and personal care items. Clarel stores will carry around 6,000 SKUs.
        Clarel was created following the acquisition of Schlecker stores in Spain and Portugal, and these stores have been refurbished and rebranded. The Clarel store image is more modern with more of a neighbourhood feel.

  • (b) Management models:
    The stores are managed either in a proprietary manner (COCO Stores – Company Owned Company Operated), or through franchises (FOFO Stores – Franchised Owned Franchised Operated or COFO Stores – Company Owned Franchised Operated).

    • COCO Stores (Company Owned Company Operated): This is the DIA Group’s initial management model, and therefore the most widely used, although in recent years it has become less prevalent than the franchise management model. The main advantages of this management model are the greater ease of adapting the business model, making changes and managing the personnel that work in the retail stores. In particular, the “DIA Maxi” retail stores for the most part operate under this model, due to their greater size, high sales potential and greater management complexity. New business concepts are first tested in COCO stores before being replicated in franchise stores.
      At the end of 2015, COCO stores represented around 52% of total DIA Group stores.

    • FOFO Store (Franchised Owned Franchised Operated): For the DIA Group, franchising is a management model and not a different retail model, so this model is treated from the point of view of the end customer in the same way as a COCO or company-owned store. It is a model that has become much stronger over recent years, and is of special significance to the DIA Group. This change in the strategy is mainly based on the proximity between franchisees and customers that provides a proximity service adapted to their needs. The franchisee manages the store in an optimal and efficient manner, and is an entrepreneur who manages the business with all of DIA’s expertise, generating wealth in the environment in which it operates.
      At end-2015, FOFO stores represented around 20% of total DIA Group stores.

    • COFO Stores (Company Owned Franchised Operated): This management model began to be implemented in Spain in 2006 with isolated tests. Since 2009, it has been implemented in a significant way. The principal advantage of this system is that the DIA Group fits out premises meeting all investment requirements and with all the necessary equipment and they are subsequently transferred to a third party for management and operation, which allows profitability to be generated for both parties thanks to the franchisee’s involvement in the operation of the point of sale.
      At the end of 2015, COFO stores represented over 28% of total DIA Group stores.
      The current franchised banners are: DIA Market, DIA Maxi, Clarel, Cada DIA, Minipreço and Mais Perto.

Creditos

Edita:
DIA, S.A.
Parque empresarial de las Rozas - Edif. TRIPARK
C/ Jacinto Benavente 2 A 28232 Las Rozas. Madrid - España

Realización y coordinación:
DEVA | Comunicación financiera y sostenibilidad

Diseño:
STROCEN.COM | New Corporate Design

Desarrollo web:
efe6 <Rebuilding ideas/>

Translation:
Tara O’Donoghue

Fotografía:
Jesús Umbría / DIA