The retail industry in Colombia is experiencing a revolution unlike any of its kind in Latin America. Today, players within the industry are proliferating rapidly in the segment of hard-discount grocery stores. In fact, this concept was invented in Germany by the late Albrecht brothers, Karl and Theo. In fact, having expanded throughout neighboring countries in Europe under the brand “ALDI” including the establishment of a competitor in Germany known as the Schwarz Gruppe K.G. under the brands “Lidl” and “Kaufland”, the concept was brought to Latin America primarily in Colombia by Chilean-born Michel Olmi. The latter grew up in Venezuela and emigrated to Colombia in 2008 after spending time in Germany. Accordingly, he learned about the hard-discount grocery store format in Germany before embarking on his fresh idea in Colombia to install himself in the virgin market there establishing an operation running hard-discount grocery stores. Grouping several local investors, he launched Tiendas D1 in 2009. Meanwhile, the success and expansion of the German concept in Colombia was rampant raising the eyebrows of local heavy hitters such as the Santo Domingo clan. As a result, he sold his 34% share of the business, known formally as Koba Colombia S.A.S., for $ 69 million in 2014 to a diversified conglomerate belonging in its entirety to the Santo Domingo family containing the ownership of various and prominent Colombian business interests known as Valorem S.A.S. Soon after, lining up funding from venture capital firms including Australis Partners (Advisors) LLC, Altra Investments Corporation, Mercantil Colpatria S.A. and the multilateral lender affiliated with the World Bank Group known as the International Finance Corporation, Michel Olmi launched an aggressive competitor in Colombia known as Mercadería Justo & Bueno S.A.S. Similarly, Mercadería Justo & Bueno has experienced exponential year-to-year organic growth since its inception in 2016 enabling Michel Olmi to launch other retail formats such as coffee shops under the brand “Tostao Café & Pan” while grouping them together under his controlled privately-held retail conglomerate known as the Reve Group Corporation.
Furthermore, the concept of hard-discount supermarkets is thriving in Colombia after undergoing a geometric progression there in terms of growth and the one responsible for it is Michel Olmi. I’m sure he’s already on the radar screen of Steve Forbes himself thanks to his acumen as a self-made and wise entrepreneur exploring fresh ideas to import that happen to be susceptible for proven and rapid success. Consequently, the hard-discount grocery store format is expected to explode in Latin America because of its appeal to cost-conscious consumers with limited purchasing power. In fact, the hard-discount grocery store business sells mostly private label goods in high demand in humble store locations allowing it to cost-efficiently pass substantial savings from lack of marketing and inexpensive display shelves on to the ultimate consumer who are then able to buy staples no one else is offering them at affordable prices. Today, Colombia has roughly a handful of companies operating in the segment of hard-discount grocery store format. The three main players representing close to 90% of the market in Colombia are Tiendas D1, Mercadería Justo & Bueno and Tiendas ARA. They’re owned by Koba Colombia S.A.S., the Reve Group through its wholly-owned subsidiary known as Mercadería Justo & Bueno S.A.S. and Jerónimo Martins Colombia S.A.S. respectively. Altogether, Tiendas D1 currently generates over $ 2 billion a year in sales while possessing more than 1,300 stores in Colombia and having a market share of 45% there. Mercadería Justo & Bueno, on the other hand, generates close to $ 2 billion a year in sales while possessing around 1,000 stores in Colombia, approximately 100 stores in Panama and a small presence in Chile as well after buying a business operation in full from a branch of the extended Engel family who happen to be related to renowned Chilean economist Eduardo Engel. In addition, Mercadería Justo & Bueno solidly possesses a market share of 30% in Colombia alone while Tiendas ARA attains a market share of 15% throughout the Colombian territory. Moreover, we have to take into consideration the pronounced advancement of Mercadería Justo & Bueno and praise the company accordingly because if we remember correctly the hard-discount grocery store chain has been in existence for a paltry four years while gaining market share aggressively in Colombia and expanding abroad as we speak.
To conclude, Michel Olmi is giving the internationally established and jet setting Santo Domingo clan a battle in their own home turf while Starbucks Corporation does not stand a chance to achieve leadership in the coffee shop business in Colombia. Michel Olmi has successfully imported a grocery store format totally unexplored in Latin America and as a consequence, his controlled retail group is a giant in the making and ripe for consolidation in the near future across the region. By the same token, I’m sure his business plan for intended and imminent explosive growth outside of Colombia including all the retail formats his controlled privately-held conglomerate now operates will accomplish success down the road. This is quite a notorious business success story that has minted a newcomer tycoon possessing enormous cleverness, grit and determination after making it big and entirely from scratch in Latin America.