Demand for affordable items drives Dali rapid expansion

Strong sales and low margins are fueling the rapid expansion of hard discount store Dali, which will increase its presence in Luzon, according to a company executive.

Hard Discount Philippines Inc. Director of Strategic Supply Chain and ESG Officer Anja Grote Westrick told reporters that the company is keen on expanding the number of Dali stores in Luzon to as many as 950 locations.

The company will unveil two more stores, increasing their locations to 630 soon. The company will also open a distribution center in Naic, Cavite by May or June this year, bringing the total number of its distribution centers in Luzon to six.

“The driver is mainly the business concept,” Westrick told reporters in an interview on the sidelines of the Asian Development Bank (ADB) Asia and the Pacific Food Security Forum last Tuesday.

“A good business concept is not based on high margins on every product but on volume so the whole discount principle is you have a limited assortment (of) products that you have in your (line that are) selling at high volume.”

Despite being on expansion mode, Westrick said Dali is not yet keen on venturing into areas outside of Luzon, saying that such move would seem like experiencing “another country” in terms of market characteristics.

Westrick also said that while Dali does not own the properties where its stores stand, expanding to new locations will depend on the landlords and “intensive” market studies that will determine whether a hard discount store will do well in a particular locale.

Preferably, Westrick said, the stores should be set up in high-density areas and should be within walking distance to households.

This explains the decision of Dali to locate some branches near each other. Having multiple stores in a high-density area allows the company to maximize its profits.

Dali Stores carry most of the regular food and beverage items found in other grocery stores except for fruits and vegetables. However, they sell chilled items that are kept in boxes that can keep them frozen for 12 to 15 hours.

Westrick said the stores carry their own labels which are made for them by local manufacturers, including its own soda dubbed Pinoy Cola.

However, stores also sell local brands as well as imported items from Europe and Malaysia. More recently, Dali has also begun selling Korean cosmetic products.

She noted that imported items are always branded as “imported” in all their stores. But the majority, or up to 70 percent, of their items are Philippine made.

“So there are some European items, but there are also items from Korea. There are items from Malaysia, from China. So (our products are) very different, but the major part is Filipino, definitely.”

Dali started operating in the Philippines in 2020. Each store is 275 to 300 square meters with extra space for delivery trucks.

Last month growth equity firm Venturi Partners announced that it invested $25 million in Dali.

“The investment will further accelerate Dali’s ambitious expansion plans to fulfill its mission to sell high-quality, affordable groceries of everyday consumption at lowest possible price in its local neighborhood stores,” Venturi said in a statement.

The transaction represents Venturi’s second investment in the Philippines, following its investment in Pickup Coffee last year, a fastgrowing grab-and-go coffee chain that provides high-quality coffee at disruptively low-price points.

Dali will join Venturi’s portfolio of consumer-focused investments in India and Southeast Asia.