The DIA supermarket chain has drawn up a plan to reform or relocate more than half of its 4,200 stores in Spain between 2021 and 2023 with the aim of improving its sales density -that is, having more income per square meter- and approaching its competitors.
This is contained in a document released by the company on Monday that includes the words of its CEO, Stephan DuCharme, who has answered questions from investors about the presentation of results for the first quarter of the year, known on May 12.
The plan is to reform about a third of its supermarket park in Spain, some 1,400 stores, to which will be added the relocation -especially between the years 2022 and 2023- of another 1,000.
This relocation process will consist of finding better locations – taking into account both the place and the size – and opening new establishments, although at the same time those nearby stores with worse sales data and that do not meet their new standards will be closed. In this way, the company expects that the total number of supermarkets will not vary substantially, although more than half will be renovated in the coming years.
For this, it has estimated an investment of between 60 and 70 million euros a year. According to his calculations, the estimate is that sales in each renovated store will increase by 10-20% the year after the works are completed.
Redesign of the commercial offer
DIA is still working on the redesign of a new commercial offer in its stores, a concept that it is already testing in a small number of supermarkets and that it hopes to implement in 2021.
From the distribution group they have recognized that their sales density is lower than that of other competitors, a key indicator when measuring the profitability of companies in the sector, so they have placed the focus on improving it.
A new franchise model
Those responsible for DIA have also highlighted the application of a new franchise model that is beginning to be tested based on “higher standards” in store and with “incentives” for its partners.
In recent months, the firm has converted franchised establishments into its own stores, although it hopes to return to market a part of these premises and to return to “have more weight” in its network when the “phase two” of its transformation ends, in which are currently immersed.
The plan of the Spanish distribution group -operative also in Portugal, Brazil and Argentina- includes the renewal of its private label and the adaptation of the assortment to the tastes and local productions of each area.
DIA closed the first quarter of 2020 with 142.6 million euros of losses, which represents an improvement of 5.7% compared to the same period of the previous year, and its net turnover decreased by 2.1%, to 1,696 millions of euros. .