Ara: Ten years of spreading wings
The take-off to a new market
When the Jerónimo Martins Group took the strategic decision to move into Colombia in 2011, traditional retail was still growing in sales year-on-year, faster than the modern retail sector and representing more than two thirds of the total market. The opportunity for a new format of proximity store was there, although it was also clear for the team under the direct leadership of Pedro Soares dos Santos, Chairman and CEO of Jerónimo Martins, that the Group’s entry in Colombia would be no easy undertaking.
This was also the first time the Group was designing, without partners, a new food store format and a business model from scratch, in a challenging market that until recently was practically unknown to Jerónimo Martins. “When we decided to invest in a country like Colombia, with a food store concept aimed at lower income segments of the population and starting up in the region with the highest unemployment rate, we were clearly choosing to get off the beaten track,” explained Pedro Soares dos Santos in an interview to a Portuguese newspaper two years after the first stores opened.
Why Colombia?
After an incursion (by acquisition), brief and unsuccessful, into Brazil in the 1990s, why the interest of Jerónimo Martins in returning to Latin America? First of all, because of its economic and political stability. Excluding the recent period of the pandemic and the subsequent worldwide inflation, Colombia has recorded only one year of negative growth since World War II, being therefore considered by the experts as a robust economy in that region of the globe. In fact, it is the 4th largest economy in the region, and, in more than 120 years, the country has had only four years of negative growth.
Colombia has also been a stable democracy in recent decades, and despite the deep instability caused by guerrilla warfare, the country firmly committed to a peace process – with an agreement signed in 2016.
At the same time, Colombia’s receptiveness to foreign capital and its respect for the rule of law offered comfort and security for prospective long-term investment. In the second most biodiverse country in the world, with more than 50% of the territory covered by forest and 75% of Colombians living in mountainous regions, there was (still is), however, a lot of groundwork to be done: the roads were still very bad and insufficient to cater for a logistics network that must be agile and efficient to fulfil the brand’s promise of “Alegria al major precio” (“Joy at the best price”) . “A trip that takes eight or nine hours by lorry can take only 20 minutes by plane,” explained Pedro Soares dos Santos to Portuguese journalists at the Group’s 2014 Annual Results conference.
Ten years after opening its first stores, the Group now has more than 1,200 and over 13,000 employees in Colombia.
Even for highly experienced teams in the retail area, things that appeared obvious often proved less so: “When we started up, there was no such thing as palletised products, something we take for granted in Portugal and Poland. We even had people delivering our crates jumbled up with mattresses! It was a huge challenge to modernise procedures, which in the short term meant higher costs for our partners. And it was all done by selling them a dream. We would tell our suppliers: you have to change how you work. And they would ask us how many stores we had. All we could say in reply was ‘we’re going to have a lot, trust us!’. It was a question of faith, hard to convince,” explained Pedro Veloso, the first General Manager of Ara, to senior managers of the Jerónimo Martins Group, nine months after operations started.
Powerful opening
On 13 March 2013, the same day the Argentinian Cardinal Jorge Bergoglio was chosen and presented to the world as the new Catholic Pope, Jerónimo Martins officially opened its first distribution centre and the first three Ara stores, located in Colombia’s coffee-growing region, in a ceremony attended by the then President of the Republic of Colombia, Juan Manuel Santos.
On the official opening day, shoppers flocked to the stores and the new macaw in town took off with clear skies on sight. Bringing new Private Brand products to Colombian consumers at affordable prices was key to tackle the market. Local independent operators were forced to change tactics quickly and responded by lowering their prices.
Private Brands first
In 2011, when the first “discovery teams” of Jerónimo Martins in Latin America were set up, work to develop Private Brands began straight away, in partnership with local suppliers.
That month, Alexandre Soares dos Santos, the historical leader of Jerónimo Martins, wrote an open letter to the more than 28,000 employees in Portugal, expressing his trust in the future: “I returned from Colombia tremendously confident that we are following the right path to succeed not only in that country but also, later on, on the continent of Latin America.” In the rest of its first year of activity, the Group settled its main operating format, opened 37 stores, and created more than 530 new jobs in the country. Ten years later, the Group employs more than 13,000 people in Colombia and operates more than 1,200 neighbourhood food stores.
The moment to go really local
In a decade of progress, not everything was pan comido (or “easy peasy”). Although the Group had teams working in the field for more than two years prior to the first openings, there are things that take time to reveal themselves completely. It was the case of eating habits, that vary from region to region, sometimes even from barrio to barrio. A single operational model for the entire country would be unlikely to succeed in Colombia. This was the moment to change the assortment from store to store. The store manager had to be, therefore, someone from the neighbourhood who was trusted by locals and given the autonomy to adjust prices in the face of fierce competition from street vendors and small grocers.
Feed’s most loyal readers may remember panela, the rectangular or round compact bars of raw sugar cane, which are extremely popular in the coffee-growing region of Colombia but mean very little to consumers on the Caribbean coast, where Ara arrived in September 2015, and opened its 100th store.
In Cartagena de Indias, fruit and vegetables became Ara’s top-selling products, outperforming the competition due to the quality of the banner’s cold chain, in a hot and humid region where presenting fresh produce was still a very challenging task.
On the celebration of Ara’s fifth anniversary, Nuno Aguiar, former CEO of the company, gave more colour on the Group’s investment in Colombia, in a message to the Jerónimo Martins’ employees: “With over 400 stores served by three distribution centres spread across 150 cities, it is safe to say that Ara is the neighbour Colombians can count on. It is through local partnerships that, together, we have been building an offer that translates into almost 600 Private Brand products, whose sales already account for more than 40 % of the total.”
Exploring new flavours
In addition to the local flavours, there are some goods that Colombia does not produce but which have become more popular amongst consumers. Such is the case of the wines and olive oil produced in Portugal.
The future is on
The story has been one of growth and, ten years on from the opening of the first store, Ara is one of the 20 largest companies in the country and a driving force for economic development. In 2022, with Pedro Leandro as CEO of the company, Ara’s sales reached the 1-billion-euros-milestone, and the Group opened its 1,000th store in Colombia, in the magical city of Cartagena.
Today, Ara works with more than 500 Colombian suppliers with whom it develops long-term relationships, boosting growth and contributing to create local jobs.
With the aim of driving proximity and going deeper into the barrios, the Group has also been “developing and piloting a franchise model that can be an answer for some small businesses that want to become an Ara store. Colombians are entrepreneurs and we must take advantage of that”, explained Leandro in an interview to the Colombian economic newspaper Portafolio.
Bodega deL Canasto
First opened in 2017 as a way of ensuring the supply of basic food products at very low prices to Venezuelans massively crossing the Colombian border in Cúcuta, Bodega del Canasto is a store format inspired by the cash and carry concept, focused on efficiency and very low prices, counting now with 49 stores and more than 350 references.
Bodega del Canasto
In March 2023, Pedro Soares dos Santos announced the plan to invest one billion euros in Colombia over the next five years, focusing on growing Ara and further exploring new store formats, such as Bodega del Canasto. The ambition is to fly ever higher.
ARA IN NUMBERS
21
(Sep. 2013)
STORES
1,241
(Sep.2023)
1
(Sep. 2013)
DISTRIBUTION CENTRES & SMALL WAREHOUSES
17
(Sep.2023)
0.2%
(Sep. 2013)
ARA’S SHARE ON THE GROUP’S TOTAL SALES
7.8%
(Sep.2023)
466
(Sep. 2013)
EMPLOYEES
12,460
(Sep.2023)
INVESTMENT BETWEEN 2013-2022
900
million euros
