The hard discount phenomenon has been gaining strength in Latin America in recent years, offering a value proposition focused on low prices and operational efficiency. This business model, which is characterized by its limited variety of products, smaller spaces and a strong commitment to own brands, has found fertile ground in the region due to the growing price sensitivity of consumers.
The hard discount channel originated in Germany in the 1960s offering a wide variety of private label products, at low prices and a focus on efficiency and simplicity.
In Europe, the Hard Discount channel already represents between 20% and 40% of retail in the countries of the bloc and in Latin America, this channel is in full development:
Brazil: The number of stores grew 10% in 2022, reaching 12,000 stores, which represents a penetration of 25% and sales of around US$35 billion annually.
Colombia: In 5 years, the number of stores has increased 9 times, reaching 3,750 stores in 2023, with a penetration of 36% and sales of US$ 5.5 billion per year.
Mexico: It already has more than 2,000 stores, 20% household penetration and US$ 2.5 billion in sales per year.
Ecuador: How has Tuti achieved success?
Ecuador has witnessed a notable success story with the TUTI store chain. This hard discount format has managed to capture the attention of the Ecuadorian market thanks to its strategy focused on offering essential products at competitive prices, without sacrificing quality.
TUTI has differentiated itself by its local focus, adapting its product assortment to the preferences and needs of Ecuadorian consumers, while maintaining an agile and efficient operating model.
The company has achieved excellent supply chain management, ensuring product availability and rapid response to market demand.
Additionally, TUTI has focused its efforts on creating a simple and fast shopping experience for the customer, reducing waiting times and offering a pleasant shopping environment. TUTI has implemented an effective communication strategy that highlights the values of price and quality, connecting emotionally with the Ecuadorian consumer. This has been complemented by a strategic location of its stores, facilitating access to a greater number of customers.
The hard discount model represented by TUTI in Ecuador is a clear example of how companies can adapt to the economic and social realities of Latin America. By focusing on the basic needs of consumers and maintaining an efficient operation, TUTI has managed to not only survive in a competitive market, but also thrive, proving that it is possible to offer quality products at affordable prices.
Sales in MM$ Tuti
Tuti has multiplied its sales by 80x in three years, achieving 31% household penetration nationwide (according to Kantar), above or on par with retailers already well established in the country, this in a single region, Costa. Recently, they have entered the Sierra, capturing 39% household penetration in months.
In summary, TUTI's success story in Ecuador reflects the opportunities that exist for hard discount formats in Latin America. Its focus on low prices, operational efficiency and adaptation to the local market has been key to its growth and acceptance by consumers. This not only benefits the local economy, but also offers a valuable purchasing alternative for Ecuadorian families, reinforcing the idea that quality does not always have to be at odds with price.
It is necessary for traditional supermarkets to adapt to this new disruptive reality, establishing a clear positioning and role in their business for each category, enhancing their development in close association with some manufacturers, building loyalty among their regular customers, creating customer experiences. differentiated purchases and strategically using promotions to reduce the impact of the average sales ticket.
At TMC we can give you support to develop the category for the benefit of your brands, with quick implementation solutions.
Sources: Kantar World Panel, Euromonitor, ABRAS Brazil, ANDI Colombia, ANTAD Colombia, SIC Ecuador.