🛒 Discounters

What we call the Retail industry comes in many forms. Each country has its unique universe of retailers that cater to the intricacies of its infrastructure, as well as its people's culture and purchasing power.

Walmart, the biggest retailer in the world, is also considered the pioneer of a category that is only recently taking Latin America by storm: ‘Discount retail’ and its younger cousin, hard discount.

In Mexico, the leading discounter is Bodega Aurrera. This budget-friendly store is owned by none other than the pioneer itself, Walmart of Mexico and Central America.

For the past 10 years, Bodega Aurrera has dominated more than 60% of the Mexican discount retail market, offering essential grocery items, basic household products, and everyday necessities at prices 15-30% lower than traditional supermarkets.

In May of this year, the discount giant opened its doors to its 2,500th store in Mexicali, Baja California, further cementing itself and Walmart as the brand with the largest footprint of grocery retail stores in the country (this excludes Oxxo convenience-type stores, of course).

This ecosystem of discounters in Mexico has given rise to a market worth $20B+ in annual sales revenue that includes other competitors like Tiendas 3B and Soriana (through its "Mercado Soriana" discount format).

Discounters have experienced a deceleration in Mexico since 2023, giving way to e-commerce, which has grown in value to nearly $45B per year.

At the same time, Colombians have fallen in love with the concept. Over the past decade, discount retailers have grown at an average annual rate of 24%, surpassing the retail share of hypermarkets and e-commerce in Mexico's ecosystem.

The competitive landscape of these retailers in Colombia is more dynamic. The country's leader, D1, has been competing with a fast-rising contender, Ara, for a piece of the pie. These two brands have effectively replaced Surtimax and Super Inter stores to become the brands of choice for everyday Colombians looking for great deals. They've done so by aggressively expanding into urban neighborhoods and small towns with compact stores offering limited SKUs, private label products at unbeatable prices, and strategic locations within walking distance of residential areas.

Each one has a slightly different focus: D1 emphasizes ultra-low prices and bare essentials with around 1,000 SKUs, while Ara focuses on somewhat higher quality private labels and fresh produce with approximately 1,500 SKUs, targeting a marginally higher-income segment.

So why are Colombians rushing to hard discounters while Mexican shoppers are pivoting to e-commerce—and what does this divergence mean for the future of retail across Latin America?

Monitor Deloitte's new report unpacks this retail revolution with data-driven insights. Discover how discounters could capture up to 40% of Latin American markets by 2030, why private labels now account for over half of sales at leading chains, and what strategies retailers need to survive and thrive.

Comment of the Week 🗣️

While we’re on the topic of retail: Alfredo comments on the dynamics of big retailers like Walmart and Falabella in Latin America.

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