DALI is a Chinese (through a Swiss entity) hard-discount grocery retailer that has gained a 6% market share in the Philippines in a short period and is now moving beyond groceries and into rural areas with a $15 million investment from the Asian Development Bank, which itself is based in Manila. The success mirrors ALDI in America against entrenched competitors, and in Colombia the battle playing out between D1 and Ara against Exito. Competing head-to-head with incumbents on their terms is dangerous in emerging markets since a handful of families tend to control most major businesses as well as having an outsized influence on capital movements and politicians.
The Philippine retail landscape, valued at $43 billion, is being shaken up by a $15 million Asian Development Bank investment in Dali, the Swiss hard-discount grocery chain. DALI already has over 250 stores in the Philippines and boasts the fastest expansion in the industry, sending tremors through established giants like SM, Robinsons Retail, and Puregold. Analysts indicate it has captured a 5% market share within its first two years of operations.
The investment capital will be used to go beyond groceries and venture into homewares and beauty products. It has built brand loyalty in the grocery business and believes it can now expand. It will launch more smaller store formats to enter into rural markets.
DALI is similar to German ALDI in that it competes on price by keeping staff numbers low and relying on private labels it controls. In the Philippines, DALI has a staggering 80% conversion rate with shoppers happy to switch to its private labels from the brands they are accustomed to. When surveyed, customers perceive the value advantage of DALI as being 20% higher than incumbent grocery retailers.
Besides private labels and low headcounts, DALI keeps costs down through smart data analytics to optimize inventory, pricing, and promotions. It prefers partnerships with local suppliers which gives the best value proposition over import-reliant competitors. On this point, DALI CEO Max Meier said in a recent interview, "Our commitment to the Philippines is long-term... We will continue to invest in local partnerships, technology, and talent to drive growth and reshape the retail landscape." Maria Perez, a retail analyst supports this assertion when she said, "DALI's impact on the market is undeniable... Their data-driven approach and consumer-centric strategy are forcing incumbents to re-evaluate their models."