On Wednesday, November 14, at the annual event organized by ASU (Association of United supermarkets), the difficulties faced by the sector were clearly exposed. "Adapting to complex times", the main panel was called on one day in which the themes of the conjuncture were analyzed (high inflation, the decline in sales, the increase in the credit and informal market) and other poststructural, such as the advancement of new competitors (wholesale and online stores), client's infidelity, promotion and reversion of stores.
"All chains are adapted and they come in between 4 and 6 difficult months, "they coincide in the industry. Analysts in mass consumption predict drop from 1.5 to 2.5% for this year and provides for a gradual recovery in 2019, but from the second semester. To talk about this cross-agenda of the challenges, the Economically he met the leaders of the country's six main chains, which comprise 70% of the supermarkets: Alfredo Koto (Koto), Agustin Bekkar Varela (Valmart), Rami Baiti (Carrefour), Federico Braun (La Anunima), Joaquín Santa Coloma (Tsentricosud) and Jean Christof Tiereas (Libertad). What follows is a synthesis of what was discussed.
– supermarkets apply changes and adjustments. How will the chains be in the medium term?
Scissors: We have introduced innovations and have a pilot with a new market (selling fresh produce), which is a new proposal. At the same time, we have greater commercial diversification and we are focusing on the consumer with a clear price proposal and by offering omnichannel.
Beccar Varela: The industry is undergoing a huge process of disruption around the world. From the point of view of customer habits and technology. It makes the relationship with our clients and the type of competition that we are facing is quite different.
– What do you mean when you talk about a new game?
Beccar Varela: I refer to the online world, such as Amazon and Argentina, with Mercado Libre. I think the speed with which we can move will have to be related to the competitive position of the industry. What happens is that we have problems in Argentina that distract us from time, energy and resources, things that do not happen elsewhere in the world. But what we're trying to do is follow the client, we know what he needs. We believe that there is no single channel, only one format, but that the client intends to choose where, when and how to buy. Let's all go to the omnichannel and we bet a lot of it. We are converting current stores, focusing on those we believe to have good potential, improving shopping experiences (payment facilities, faster outbound lines), and strengthening the format e-commerce, with the possibility of home delivery. In this case, it is crucial to build alliances with other types of players, to share investments, customer data and skills. Today we work with Mercado Libre in a scheme in which we are competitors and allies at the same time.
Baitiéh: I arrived in Argentina in January and I think that the client will be more professional for the assortment, which requires more diversification and requires a powerful one. The one who goes first in the store, then on e-commerce, which decides according to the promotions. It is more problematic in everything and the future of consumption starts today with today's actions. We have a mission, like doctors, to help people live better.
– Specialists emphasize that the Argentine public is very unfaithful, much more than in other countries. Why is this happening? Is it a feature of a local consumer or do supermarkets fail?
Santa Coloma: The market that has been looking for as ours and with a lot of competition, with so many options and promotions, has created a client who is dedicated to thinking and understanding the offers of brands and chains. This is much more visible in the interior of the country, where people have more time and distances are shorter. And also of necessity, because everyone takes care of the pocket and we have a client who has a very well-reduced exercise to search for the best deals.
Brown: I agree with everything I said about transformations, but I would like to emphasize some of the features because we are from the interior of the country. The customer who is in the middle of nowhere is very different from the one in the capital. For example, we have developed an online platform with many defined features: one is that we sell everything that does not suit us in our stores or because of lack of space. I put the example of the white line, an item we did not have and we see that the digital channel, added to the logistics we have, has enormous potential. On the other hand, we have developed our own card to build loyalty. And having two own refrigerators gives us a competitive advantage, because there is a very positive association between the external and internal markets: no one eats a barbecue as it is done in Argentina, because it has a bone, something that can not be exported. This allows us to complement the domestic export market very well. The idea is to continue to grow with these three tools across the country.
Coto: My very little is, something that speaks a lot. We are very clear about where we are and where we should go, and we do it by generating ideas and new suggestions. What needs to be understood is that technology takes forward not only all commercial alternatives, but also other industries, such as the automotive industry. It's everywhere and you see deep changes. Faced with these innovations, those of us who are in charge of companies are obliged to create new ideas to keep you in business and try to capitalize it. Now, at a general level, there must be a stronger and stricter state administration in the economic management of the country. Obviously this goes in that direction, but the results do not appear in a year, or two, or three. From here we observe China that grows and has great potential to use. And then, at the country level, the only valid thing is competition.
– Specialists emphasize another aspect of competition, namely overlapping of channels: wholesale traders pointing to the final consumer; stores that are supplied in the super to take advantage of the offers; advances in pharmacies. How do you analyze the problem?
Scissors: We see this in other countries, but they are formal, loyal competencies. And thanks to that competition, we have to discover each day. But we can not do this against informal competition and the black market. Competing against different formats, it seems perfect, we do it every day and every week. And when we face other competitors, what we are proposing are new ways to offer services.
Beccar Varela: When we analyze the information circulating, there is a tendency to confuse, think in a structured way, which are our competitors. For us, our competitor is any place where the buyer buys, be it super, wholesaler, fairs, pharmacies. Thats all. What we need to understand very well is the client can offer him as best as possible. Not everyone can do the same, but on our side we have a great opportunity, with a portfolio of stores with more dimensions, including the digital channel. But there is something that we all agree: if the rules of the game are the same for everyone, the competition is welcome. I have no problem competing with anyone on the table. The problem is when you compete with someone who does not follow these rules. After that, the buyer buys where he wants: our goal is to know and to work with value propositions, but always to look for the same rules for everyone.
Baitiéh: Competition is a healthy thing that enables us to innovate. Personally I see the stores of all competitors and I study some things. Competition is healthy in our profession. Now, what we need is that the same rules exist for all chains. That's what we want, a fair market and an equal market for all.
Santa Coloma: I agree with everything that has been said so far. In our case, for the next year we aim to play the game with each of our flags (Jumbo, Disco and Wea), which point to different segments. We are trying to be smart to use our brands for the game that suits them. I think that the biggest challenge, which has three good brands in our portfolio, is to distinguish the segments.
– Since last year supermarkets have been warning about the growth of the informal market and evasion. What numbers are they processing?
Brown: It is very common to hear that the informal market is about 30%, but on a general level. Now, if we observe what is happening inside the country, in the segment of mass consumption in some places it reaches 70%. This is not the exclusive responsibility of the current government: it is an endemic case, which is exacerbated in the most difficult contexts. But, fortunately, the government clearly understands and there is a complete coincidence between companies and the administration. One thing is the informality that exists in all countries. For example, in Chile, unfair competition is almost zero. In Argentina the level is really serious.
– What businesses evade taxes? Do you identify them?
Brown: There is everything from Asian shops to fairs. What is inadmissible is that the government itself promotes fairs. This is impossible and it is more serious in it. What needs to be understood is that I can not beat the informal business that sells the same products at half price.
Santa Coloma: I agree with Brown that in the interior the subject is more serious. I also believe that the high tax burden favors evasion. Having higher taxes (gross income and allowances) allows for informality to have more opportunities. If supermarkets pay between 7 and 8 points more than the one working in black, more advantage is needed.
-You agree that the black market is very high and that the interior is more serious. Are the failures in the controls at the national, provincial or municipal level?
Coto: It is very difficult to manage a country with no currency, for example. That's what economists say and talk about what we are in this day. This is an endemic problem, for many years. And if we follow the route made by many European countries, this will eventually be formalized. We have a great country, I repeat, with many opportunities in the agro-industrial area. But there is still much to be done, where production can double, or even increase three times, which is what we know how to do.
– The chains promote promotions to attract the public. Experts warn that such offers generate great distrust and confusion with prices. How to get out of it? Should we reformulate them?
Scissors: What we want is that there are clear references for the consumer. Our focus is to concentrate promotions (all by 10%, a discount of 15%) to make it as precise as possible. This is what we did this year and we will repeat this strategy in 2019.
Beccar Varela: Around the world there are companies that work with proposals "daily low prices". Walmart is one of them, while others have a strategy for making withdrawals and offers more often. What I believe is that for a system of "low prices every day" for work, it can not be done with an inflation of 30% or 40%, because people lose the reference to the value of things. We try, but the boundary we have is the level of perception of people.
– Is it better to apply concrete rebates over time? Do you think that with it?
Beccar Varela: Our idea is to keep the price / product ratio as long as possible. At the beginning we achieved, but now with the rise in inflation is a bit more difficult. However, here, in this table, we are supermarkets, but there are also suppliers, who also conduct promotions as a formula for reducing the average price. I think that we are together and ultimately the client who decides, and what we are dealing with is to convey the clearest possible message so that the consumer can make the best decision.
Baitiéh: Carrefour has 70 years of experience in the retail market and in Argentina, 35 years. We have two rules: first, the lowest price. And if then there is an opportunity to reach a good deal with the supplier, what is known as promotion, or also an opportunity for the client to use it, we also do it. Now I think it's necessary to adjust the promotional theme. There are unnecessary promotions for the client and it would be necessary to go back to the beginning of the meaning of the promotion, which is to offer an opportunity. The campaign "Brave Pricing", which started last year, is a good idea, with which we try to go back to the principle of "lower prices". And the client notices this. This year more than 2 million tickets have been raised, not customers. We adjust prices, promotions, assortments, within a strategy we define as a cultural change to the client. That policy already works, with more turnover and more customers.
– The Argentine public is considered very unfaithful. Only 36% buy their products in the same place. It has to do with widespread distrust of prices. How do you plan to solve it?
Santa Coloma: I think we should work on this issue. We have conducted studies that indicate that customers are overwhelmed with the amount of offers that exist. Sometimes we think that we do not understand the offers we offer: much less will the customers understand. In this sense, we are progressing inward with concrete offers based on price / product, but I agree with Beccar Varela that with high inflation is very difficult. But I think we should work to help the client, because we understand that today, for the consumer, going to a supermarket is a boring task, and what we are looking for is simply to do it.
Beccar Varela: Last year we implemented the new price system, based on a basket of "invincible products", with rebates, because they are our own brand. The truth is that this clarity in prices is highly appreciated by customers. To avoid confusion, we went out to convey it.
Brown: We are in it and share the things they said. In our case, our strategy is based on three axes: in developing your own brand, in order to give more breadth and more intelligence. Secondly, we analyze how to make our offers more efficient. And thirdly, we want to reduce the logistics cost. You should look for opportunities and develop them. This amount of things is what allows us to continue to make progress.
-This is known for the progress of the second brand. Can you make a balance?
Coto: The development of one's own brand, as long as the quality of the products is respected, is a good suggestion. In the second brand, the topic is quality. We, the big retail chains, have quality control. When we look at a product, we have the ability to carry out controls.
Scissors: Like all of us here, we have our own brand, second and third brand, clear prices, care prices and we have between 5 and 6 brands with different prices. This allows us to build a diverse basket and improve the offer.
Beccar Varela: On the topic of our own brands we have a discussion with our suppliers.
– I suppose that the manufacturers of leading brands do not like the idea. Are strong arguments?
Beccar Varela: They are debating (laughs). But the idea is how to save people easier. Internally, we think that we are the buyers of our customers. We are the ones who buy for them and want to have what they need. Our proposal is to have leading brands, but also suggestions for cheaper brands. In this sense, our brand is the main vehicle and has grown very strongly. In some categories they have up to 18% participation.
– Do the rest of the chains have those percentages?
Baitiéh: Promo "Precious prices" is based on products from our brand. The principle is that in this way we can help the supplier, who has no known brand and we give it in return for a good price. When we have such an opportunity, it enables us to benefit the client, supplier and our chain. Own brand, on average, has a share of 10%.
Beccar Varela: The own mark reaches 18% in some categories, but in the general average it is about 16%.
-What are the priorities of each chain for the next year?
Santa Coloma: Two priorities: the first is to optimize the profitability of square meters of shops, especially those with the largest surface and hyper. In this sense, the goal is to reduce some meters and move it to other boxes, with the possibility of renting that area to third parties and that we are forwarding the public. Then, with the Disco brand, the definition is to keep it. The goal is to improve the Disco stores that were old. Finally, we are working hard to reduce operating costs. Сè уште има работи, но секогаш има нови идеи.
Браун: Во контекст како оној низ кој поминувавме, со стапките, за кои се надеваме дека ќе се намалат брзо, време е за ефикасност, да ги прилагодиме сите процеси. Имаме многу задоволства во таа смисла, со многу промени во спроведувањето на средствата за плаќање, продуктивноста и потрагата по можности за пониски цени. Денес целата организација е осудена на тоа, бидејќи ние сме во земја без кредит и тоа е слабост за локалните компании, бидејќи е многу тешко за нас да финансираме програма за раст. Сега, кога ќе помине овој процес, ќе бидеме во состојба да продолжиме со проектот за раст што го имавме историски.
Coto: Ние сме во истата. Ние би сакале да одиме побрзо во растот, но мора да бидеме претпазливи бидејќи успехот на нашата компанија не е да се позајмиме премногу. Во земја без стабилна валута, обврската е да биде разумна. Ние малку растеме по малку и ако е можно да се отвори уште една уста, тоа го правиме затоа што претставува малку повеќе.
Ножици: Имаме три оски на работа за 2019 година. Проектот на свеж пазар (свежи производи), зајакнување на omnichannel и зајакнување на e-commerce. И, конечно, предлагам желба: да ги намалиме финансиските трошоци, што денес е неизводливо, што не е одржливо, а не само за нас супермаркети, туку и за целата земја.
Beccar Varela: Пред три години започнавме процес на трансформација базиран на три точки: подобрување на односот со цена и искуство, инвестирајќи многу во подмладување на продавниците, паричните линии и каналот за е-трговија. Втората оска е иновација во процесите. Мораме да бидеме ефикасни за да можеме да се натпреваруваме. Третата оска е ефикасноста со која работиме. И единствениот начин да се направи ова е со талент, на повеќе соработка, поагилно и повеќе дигитален начин.
Baitiéh: Приоритет е да се продолжи со промената и да се изврши побрзо со тимот. Исто така ги користиме нашите продавници и развиваме нарачки преку интернет за да ги олесниме купувањата.