Coronavirus (COVID-19): DIA evolves its online operations in Latin America in response to Covid-19

Oliver Butterworth
Retail Analyst
@RetailAnalysis

Date : 01 May 2020

Less than a year after closing its online operations in Brazil, DIA has partnered with online food deliverer iFood to reintroduce a delivery service in the country. Similarly, in Argentina it has partnered with Pedidos Ya (Order Now) and Glovo, to cope with overwhelming demand for deliveries as a result of the lockdown.

Latest DIA store design in São Paulo, Brazil

Source: IGD Research

Discounters in the region forced to evolve their proposition

Discounters are typically operated as offline businesses, making them heavily reliant on sales made in physical stores. In usual circumstances, much of their success is in their proximity to customers’ homes (as well as their low prices). However, social distancing measures have seen many customers turn to grocery shopping online. The discount operators are, therefore, having to respond quickly to maintain sales.

Marcel Maia (DIA Executive President of Brazil) comments "Everything that is happening, all these changes have generated a parallel movement in which we have to adapt".

Colombia is the most dominant market for discount growth in Latin America and we recently saw Colombia’s discount market leader, D1, partner with two third party delivery companies, to extend its operations online. More here.

DIA partners with iFood in Brazil…

DIA ended its ecommerce proposition in Brazil in May 2019, but it recently announced its intentions to re-establish digital operations later in 2020. Considering coronavirus and changes to consumption habits, DIA has brought this forward. In Marcelo Maia’s words; “The medium-term plan became short-term.”

To facilitate grocery deliveries, DIA has partnered with iFood, a third-party delivery specialist. iFood originally launched in Brazil in 2011 and was Latin America’s first (large-scale) online food delivery food service. Despite other businesses entering the market since, including Uber Eats, iFood remains the market leader by some distance. 

The two businesses launched a trial in early April. Initially delivery is only available in central areas of São Paulo, but the plans are to gradually extend this coverage.

Source: Linked In (DIA Brasil)

       

…and with Glovo and Pedidos Ya in Argentina

DIA already offers its own online delivery in some of the larger cities in Argentina. Customers can place orders through the ClubDIA app and make payments digitally. However, as with most of the major retailers in Argentina, DIA has struggled to manage the unprecedented demand for online deliveries since quarantine (covered more here) was introduced.

To deal with this, it initially partnered with Pedidos Ya (Orders Now), who are part of the German multinational Delivery Hero business. More recently, it decided to make a secondary partnership with Spanish delivery app Glovo to further bolster its delivery capabilities.

Source: iProUp

         

In its partnership with Glovo it now offers a delivery service from 160 DIA stores in and around the capital, Buenos Aires. Orders are made through the Glovo app and to protect customer safety, Glovo’s deliverers leave purchases at the customers’ door, or at a safe distance of two meters.

Executives from DIA Argentina said “this new scenario requires rapid action to be able to respond to the high demand for online purchases from people. Strengthening our team and building new alliances, we do our best to bring more families closer to what they need."

The need for a stronger ecommerce proposition

Given discounters’ strong store bases and the need to maintain efficiency in their operations, ecommerce is a channel they have resisted expanding online. However, globally, the need to be able to meet shoppers’ online demands is growing and encouraging them to create online solutions. This is one of the hypothesis we look at in our presentation on Post-coronavirus (COVID-19): how the discount channel could change, which is available to subscribers.

Looking for more insight on coronavirus and its impact globally?

Get the latest insights to help your business understand what the food and grocery industry is doing around the world to address the evolving pandemic by visiting our Coronavirus (COVID-19) hub.

We take an in-depth look at the discount channel in Latin America. We focus on key markets, like Brazil, Colombia and Mexico, and the retailers driving growth in the channel, including ara and Bodega Aurrera.

We’re wrapping up 2019 by looking at some of the most insightful discount stores we visited this year. This report will give you a view on how the discount channel is evolving globally. Discounters use a more shopper centric strategy, they invest in technology in their stores and evolve their assortments to align with latest trends.

See the latest industry news on Latin America.