The need to diversify is a challenge that seems to be facing several discounters around Europe. For some, such as Aldi, Biedronka and Lidl, one answer appears to lie in urban or ‘convenience’ concepts. In other cases, notably for Biedronka, DIA and Magnit, another solution is the creation and expansion of drugstore/health & beauty concepts. Biedronka has started putting some investment welly behind its Hebe concept, while neighbourhood discounter Magnit has progressed well in opening hundreds of its Magnit Cosmetics format. For Spain-based discounter DIA, one of its diversification vehicles is Clarel, a rather nifty little drugstore concept.
With its ongoing sale of DIA France to Carrefour, DIA’s European presence will comprise just Spain and Portugal, with global operations comprising Argentina, Brazil and China. DIA’s Iberian operations, therefore, will become even more important to the broader business in relative terms (Iberia already accounted for 54% of sales in 2013).
Investments in the Spanish market have been ramped up in the recent past, with efforts including store openings, refurbishments, new concept developments and the EUR70 million acquisition of stores in Spain and Portugal from drugstore chain Schlecker, the Germany giant that went belly-up in 2012. At its peak, Schlecker had over 10,000 stores and employed over 50,000 people.
Many Schlecker stores have already been converted to the Clarel concept, while new Fresh concepts have recently been added, meaning DIA has six different concepts in the Spanish market, enabling the retailer to cater to a more diverse range of shoppers and shopper missions.
Although some Schlecker stores are still trading, some have been closed pending conversion and the majority have been reinvented as Clarel, DIA’s most recent store concept innovation. The retailer’s intention is for Clarel “to become the benchmark neighbourhood store for shoppers looking to buy health, beauty, household and personal care items.”
The stores are fairly small, but a carefully selected assortment of around 6,000 SKUs means that the outlets are not overcrowded or cluttered. As former Schlecker stores, Clarel outlets have inherited a variety of quirky footprints. This store, in Madrid, was very long and narrow, although the limited range and clear segmentation of categories meant that the store felt fairly spacious and uncluttered and was very easy to shop. This shopping experience was enhanced by the amazingly friendly and welcoming attitude of the solitary sales assistant on the shop floor. Superb customer service all round.
As well as a wide range of branded lines across all categories, private brand was deployed well too. In a nod to the parent company, the DIA brand is used extensively throughout the store, in categories including health & beauty, household, confectionery, drinks and grocery. Alongside the DIA brand, the legacy AS (Schlecker) brand is also in categories like dishwashing, paper and pet. AS has already been expanded into the main DIA chains as a petcare brand, suggesting it will remain part of the long-term PL portfolio across the broader businesses.
As part of the DIA family, Clarel shoppers are able to benefit from the use of the Club DIA loyalty programme. This grants shoppers access to exclusive discounts and multi-buy offers, an initiative that sits alongside hundreds of ‘promo’ price reductions across the store, meaning that Clarel’s value proposition is fairly compelling. Merchandising and décor in the stores are impressive. Fixtures and graphics are used well to create a decent perception of both quality and affordability.
In addition to the regular drugstore range, there is an impressive section devoted to skincare and cosmetics, including some high profile brands housed in their own display units. Although space is very much at a premium in the store, there is still scope for shopper marketing and brand activation activities, particularly at the front of the store near the checkouts.
To say that Clarel has a strong upside for growth is something of an understatement. More than 550 Schlecker stores will be converted to Clarel in Spain and Portugal during 2014 with the remaining Schlecker stores to be upgraded to Clarel in 2015. Based on my encounter with the brand in Madrid, its chances of success are pretty decent. Prospects are not just about Schlecker conversions though: this year will see DIA open more than 100 new Clarel stores in Spain and Portugal, with organic expansion slated to reach a rate of 150 new stores per year from 2015. DIA has asserted that this is a growth rate that can be maintained for several years and has also flagged up the possibility of overseas expansion, franchising and/or licencing. Clarel is a welcome addition to the European drugstore landscape.
Store design: 8 (good effort given the store’s footprint)
Customer service: 9
Private label: 8
Total score: 39