On Wednesday, November 14, the annual event organized by the ASU (Association of Unified Supermarkets) clearly revealed the challenges facing the sector. "Compliance with complex times"The main panel of a day in which the conjuncture is addressedhigh inflation, decline in sales, credit and unregistered market) and other structural elements, such as the progression of new competitors (wholesalers and online shopping sites), customer's infidelity, wear out of promotions and recycling of stores.
"Adjusting all chains and they come from 4 to 6 months ", the same in the industry. A decline between 1.5% and 2.5% expects a gradual recovery for this year and 2019 second period. Talking about these diagonal agendas, economic he met leaders of the country's 6 main chains70% of the supermarket, Alfredo Coto (Coto), Agustín Beccar Varela (Walmart), Rami Baitiéh (Carrefour), Federico Braun (La Anónima), Joaquín Santa Coloma (Cencosud) and Jean Christophe Tijeras (Libertad). Below is a synthesis of what is being discussed.
– Supermarkets apply changes and adjustments. How will the chains be in the medium term?
scissors: We've introduced innovations and we have a new market (selling fresh produce) and a pilot with a new offer. At the same time, we have more commercial diversity and focus on a clear quotation and a multi-channel offer to the consumer.
Beccar Varela: The industry is going through a massive disruption worldwide. Customer habits and technological aspects. This makes the connection completely different with our customers and the type of competition we face.
– What do you mean when you talk about a new contest?
Beccar Varela: I refer to the online world like Amazon and Argentina with Mercado Libre. I think the speed at which we can move should be about the industry's competitive position. What is happening is that we have problems in Argentina that distract the attention of time, energy, and resources that are not happening in other parts of the world. But we're going to try, follow the customer, know what he needs. We believe that a single channel, not just a format, decides where, when, and how the customer buys. We all go to the omnichannel and we're betting heavily on it. We are focusing on transforming our existing stores, having good potential, improving our shopping experience (payment ways, faster payment lines) and strengthening the format. E-CommerceWith the possibility of home delivery. In this way, it is very important to form alliances with other players, to share investments, customer data and skills. Today, we are also working with Mercado Libre in a program where we are rivals and allies.
Baitiéh: I came to Argentina in January and I think the customer will have more variety and will be more demanding in the range of products that he is looking for. Someone going to the store, then E-Commercedecides according to promotions. Everything is more demanding and the future of consumption begins with today's actions. We have a job like doctors to help people live better.
The experts stress that the Argentine people are very unfaithful to other countries. Is it a feature of the local consumer or are the supermarkets unsuccessful?
Santa Coloma: With so many options and promotions, we created a customer who is dedicated to thinking and understanding the offer of a market, brand and chain that is demanded by us and with so much competition. This is more visible in the interior of the country where people are shorter than more time and distances. And also because it lacks the requirement, everyone has a customer who cares about the pocket and has a very well-oiled exercise to find the best deals.
Brain: I agree with what I said about the transformations, but I want to emphasize some of the features because we are from the inside of our country. The customer in the middle of the region is very different from the Capital. So, for example, we have developed an online platform with many defined features: First, we sell everything that doesn't fit us in our stores or because of the shortage of space. I put the example of the white line in a material that we don't have, and we see that the digital channel added to the logistics we have has enormous potential. The other is to develop our own card to build loyalty. And having two own refrigerators gives us a competitive advantage, because there is a very positive relationship between the foreign and domestic markets: no one eats barbecue because it is made in Argentina, because it has something that cannot be exported. This enables the domestic market to be completed very well with exports. The idea is to continue to grow with these three tools across the country.
Coto: Mine is very macro, something that is spoken too. We are very clear about where we are and where we should go, and by doing so, we produce new ideas and suggestions. What you need to understand is that technology does not only offer all the commercial alternatives, but also other industries such as the automotive industry. It is everywhere and there are profound changes. When they come face to face with these innovations, those responsible for the companies are obliged to produce and activate new ideas to keep you in business. Now, at a general level, the country's economic administration should be a stronger and more strict state administration. Apparently it is moving in this direction, but the results do not appear in one year or two or three times. We observe a Chinese that grows from here and has a huge potential, which we must take advantage of. And then, at the country level, the only valid thing is competition.
– Experts emphasize another aspect of competition, more specifically the overlap of channels: wholesalers pointing to the end consumer; super supply shops to take advantage of offers; progress of pharmacies. How do you analyze the problem?
scissors: We see this in other countries, but the official, loyal competencies. And through this competition, we must rediscover ourselves every day. But we cannot do this against unofficial competition and the black market. Compete against different formats, looks perfect, are making every day and every week. And when we meet other competitors, the services we offer are new ways of providing services.
Beccar Varela: When we analyze the information circulating there, there is a tendency to interfere with our minds, to think about our competitors in a structured way. For us, our competitor is the place where the customer buys super, wholesaler, trade show, pharmacies. These. What we have to understand very well is to offer the customer what we can do best. Not everyone can do the same, but we have a great opportunity with a portfolio of multiformat stores on our side, including the digital channel. But there is one thing we will all agree: if the rules of the game are the same for all, the welcome is the competition. I have no problem competing with anyone on the table. The problem is when you compete with someone who doesn't follow the rules. Then, the customer buys the place he wants: our goal is to know and work for value suggestions, but he always fails to demand the same rules for everyone.
Baitiéh: Competition is a healthy thing that enables us to innovate. I personally observe all the competitors' stores and learn some things. Competition is healthy in our profession. Now, what we need is the same rules for all chains. What we want is a fair market and an equal market for all.
Santa Coloma: I agree with everything that has been said so far. In our case, we aim to play the game with flags (Jumbo, Disco and Vea) pointing to different sections for the next year. We try to be smart to use each of our brands, the corresponding game. Our biggest challenge is to have three good brands in our portfolio and to distinguish between segments.
– Since last year, supermarkets have warned about the growth and abduction of the informal market. What numbers work?
Brains: It is very common to hear that the informal market is generally around 30%. Now, if we observe what is inside the country, it reaches 70% in some places in the mass consumption segment. This is not the sole responsibility of the current government: it is an endemic situation that is exacerbated in the most severe contexts. But fortunately, the government is open and there is a coincidence between companies and management. One thing is informality that exists in all countries. For example, unfair competition in Chile is almost zero. The level in Argentina is really serious.
– What kind of work is avoiding tax? Have you identified them?
Brains: From Asian stores to fairs. What is unacceptable is that the government itself supports the fairs. This is impossible and more serious in it. What you need to understand is that I cannot pass an informal job that sells the same product at half price.
Santa Coloma: I agree with Braun that the subject is more serious. I also believe that the high tax burden favors smuggling. Higher taxes (Gross Revenues and Wages) allow informality to have more opportunities. Supermarkets offer more benefits if they pay 7 to 8 points more than employees in black.
-You agree that the black market is too high and more serious inside. Are there errors at national, provincial or municipal level controls?
Coto: For example, it is very difficult to manage a country without money. This is what economists say and we are talking about what we are today. This is an endemic problem of many years. And if we follow the route of many European countries, this will eventually be formalized. We have a big country, I repeat with many opportunities in the field of agriculture-industry. However, there is still a lot to be done, where production can be doubled and even tripled.
– The chains encourage publicity to attract people. Experts warn that prices are very insecurity and confusion. How can you survive this? Should we reformulate them?
scissors: What we want is that there are clear references to the consumer. Our focus is to concentrate promotions (10%, 15% discount) to make it as clear as possible. This is what we did this year and we will repeat this strategy in 2019.
Beccar Varela: There are companies working with "low prices" offers all over the world. Walmart is one of them, others have a strategy of withdrawal and more frequent bidding. My stubbornness is that the "low prices" system cannot be done with 30% or 40% inflation, because people refer to the value of things. We try, but the limit we have is the level people perceive.
– Is it possible to apply certain discounts according to time? You think that's what this is?
Beccar Varela: Our idea is to keep the price / product ratio as long as possible. At first we managed to do so, but now the rise in inflation is a little more difficult. However, here, in this table, we have supermarkets but also suppliers who carry out promotions as a formula to lower the average price. I think we're together, and ultimately, the client who decides, and ultimately, the clearest message to make the best decision.
Baitiéh: Carrefour has over 35 years experience in the retail market and in Argentina. We have two rules: first, lowest price. Then, if we have a good deal with the supplier, what is known as a promotion, or the opportunity for the customer to take advantage of it, we do so. Now I think you need to adjust the presentation theme. There are useless promotions for the customer and it will be necessary to return to the beginning of the meaning of the promotion which will offer an opportunity. The "Courageous prices" campaign launched last year is a good idea that we are trying to return to the "lower prices" principle. And the customer will notice it. This year we sold more than 2 million tickets, not customers. We organize prices, promotions and varieties within a strategy that we define as a cultural change towards the customer. This policy is already working with more turnover and more customers.
– The people of Argentina are considered very unfaithful. Only 36% do their shopping in the same place. This is related to the widespread distrust of prices. How do you plan to solve this?
Santa Coloma: I think we should work on the subject. We have done studies showing that customers are drowned by the amount of available offers. Sometimes we think we don't understand what we do: customers will understand less. In this sense, we will advance the interior with special offers on a price / product basis, but I agree with Agustín (Beccar Varela) that high inflation is very difficult. But I think we have to work to help the customer, because we know that today, going to the supermarket for the consumer is a boring job, and what we're looking for is doing it in a simple way.
Beccar Varela: Last year, we implemented a new pricing system based on the "unrivaled products" basket because these are our own brands. The fact is that this openness in prices is very valuable to the customers. To avoid confusion, he went out to communicate.
Brain: We're inside and I'm sharing it. In our case, our strategy is based on three axes: in the development of its own brand, in order to give it with wider and more intelligence. Second, we analyze how our offers will be made more efficient. And thirdly, we aim to reduce the cost of logistics. You have to search for and develop opportunities. The sum of these things is what keeps us moving forward.
– The progress of the second brands is bad. Can you make a balance?
reserve: As long as the quality of the products is respected, the development of its own brand is a good offer. A second brand is the theme quality. Our large retail chains have quality controls. When we look at a product, we have the possibility to perform the checks.
scissors: We all have our own brand, second and third brands, net prices, maintenance prices and we have 5 and 6 brands in different prices. This allows us to build a variety of baskets and improve the offer.
Beccar Varela: We have an interview with our suppliers about their own brands.
– Let's say that manufacturers of leading brands do not like this idea. Strong arguments?
Beccar Varela: They are discussions (laughing). But the idea is how we make saving for people easier. Internally, we believe that we are our customers' purchasing tool. We are the ones who buy for them and want them to have what they need. Our recommendation is to have the leading brands, but also offers for cheaper brands. In this sense, our brand is the main tool and has grown very strongly. Some categories have a participation rate of 18%.
– Do the rest of the chains have these proportions?
Baitiéh: "Valuable Prices" promotion is based on the products of our brand. The principle is that in this way we can help a supplier who does not have a known market and gives our own for a good price. When we have this possibility, we will be able to benefit the customer, our supplier and our chain. Our brand has an average share of 10%.
Beccar Varela: Our own brand reach some 18% in some categories, while the overall average is around 16%.
– What are the priorities of each of the chains for the next year?
Santa Coloma: Two priorities: First, it is to optimize the square meter size of the stores, especially the largest surface area and the hyper ones. In this sense, the goal is to reduce some meters and move them to other boxes, to rent this surface to third parties and to move publicly. Then, with the Disco brand, its definition is to protect it. The goal is to develop disco stores that are old. Finally, work hard to reduce operating costs. There are things to do, but there are always new ideas.
Brain: In a context like this, it's time to productivity to adjust all processes, with the proportions we hope to quickly go down. In terms of payment, we have many changes in productivity and many opportunities to investigate the opportunities for lowering prices. Today the whole organization is doomed because we are in our country without a loan, which is a weakness for local companies because it is very difficult for us to finance a growth program. Now, when this process is over, we will be in a position to sustain our historical growth project.
Coto: We are the same. We want to go faster in growth, but we have to be careful because our company's success doesn't owe much. In a country that is not a stable currency, its obligation is to be cautious. We are growing little by little and if we are able to open one more mouth, we are doing this because it represents a little more.
scissors: We have three business axes for 2019. The fresh market (fresh products) project, strengthen the omnichannel and increase eCommerce. And finally, I propose a desire: to reduce the financial cost that is unsuitable for today, not only for us, but also for the whole country.
Beccar Varela: Three years ago we started a transformation process based on three points: to improve the price-experience ratio, to invest heavily in the rejuvenation of stores, cash lines and eCommerce channel. The second axis is innovation in processes. We must be efficient to compete. And the third axis is efficiency. The only way to do this is with a more collaborative, more agile and more digital way.
Baitiéh: The priority is to continue with the change and move faster with the team. Also use our stores and develop online orders to make purchasing easier.