Rising star: ADB-backed DALI to shake up retail giants SM, Robinsons, Puregold

By Ian C. Sayson

The Philippine retail scene is witnessing a potential shakeup with the rise of DALI, a Swiss hard discount grocery chain backed by the Asian Development Bank (ADB).

DALI’s focus on affordability and convenience is attracting budget-conscious Filipino consumers, potentially posing a threat to established giants like SM of the Sy family, Gokongwei’s Robinsons, and Lucio Co’s Puregold.

Operating under a lean business model, DALI has been strategically placing stores in residential areas and near wet markets, offering easy access for everyday needs. This targeted approach has yielded impressive results, with the company boasting over 250 stores by the end of 2022, a remarkable feat amidst the pandemic.

With rising inflation in the past year and the erosion of consumer purchasing power since the pandemic, DALI’s low price and high quality proposition is particularly successful in the Philippines, a country listed by Velocity Global as among the 10 nations with the lowest minimum wage. According to the Asian Development Bank, almost half of Filipino households are “moderately or severely food insecure.”

“DALI poses a serious threat to all retailers, including convenience store operators,” says Jonathan Ravelas, managing director at eMBM Services, a provider of consultancy services. “DALI is slowly changing the playing field. It is the answer to inflation and consumers on a tight budget.”

Hard discount supermarkets, believed to have originated in Germany, saw their biggest success story with ALDI (unrelated to DALI). In 1946, Karl and Theo Albrecht took over their mother’s corner store in Essen, marking the inception of ALDI. With a presence in over 12,000 stores across 19 countries, the family corporation underwent a strategic split in 1960, enhancing efficiency and accelerating expansion.

Hard discount retailers keep product prices low through high sales volume of a limited product range and lean operations.

DALI stores usually just have a two-person staff and use boxes and pallets to display products to cut costs. DALI also carries its own in-house brands for a number of products like coffee, disinfectant, soft drinks and frozen meat. It also sells imported goods like chocolates, cookies and beer.

In March this year, the Asian Development Bank (ADB) announced a $15 million investment in DALI to enhance its Philippine network, which, by the end of 2022, comprised three distribution centers. Beyond outlets, the investment encompasses the development of distribution centers and a cold chain facility, resulting in the creation of at least 4,300 new jobs, with almost half designated for women.

DALI is steadily cultivating a consumer base without resorting to TV and radio advertising to maintain cost-effectiveness. The absence of traditional marketing is compensated for by the positive word of mouth generated by satisfied shoppers, coupled with a robust presence on social media, including Facebook.

“Sinubukan ko dahil sabi ng kapitbahay ko mura at mas mura talaga,” says Lisa Macatangay, a teacher and a regular shopper in a DALI store in Lipa City. “Pili lang ang binebenta pero ito naman talaga yung kailangan mo.”

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