What happened with Latin American Retail since the beginning of confinement for the Covid-19 pandemic has been discussed extensively. Some differences have been observed between countries, channels and types of stores, but, overall, there has been an increase in panic shopping at the beginning of the crisis in almost every product category.
In some countries, e-commerce has soared. In a number of cases, it has grown between 200% and 300%, and it has even increased by 500% in some categories. Home deliveries have brought benefits to traditional channels (in local convenience stores in which deliveries used to represent 50% of sales, they now account for 80% of sales); a double-digit growth of up to 2X has been observed.
The pharmaceutical channel in general was overwhelmed at the beginning of the crisis due to the supply of health, cleaning and personal hygiene products. Traffic was reduced after the first week. The exception was pharmacies in certain countries which function as convenience stores and offer a wide variety of mass consumption products. In some cases, there continues to be moderate traffic of customers, who mainly buy food (Argentina, Mexico, Colombia, Chile).
WHAT’S NEXT IN THE COMING MONTHS OF CONFINEMENT
From May on, we know that, in general, we can expect a negative impact on variable sales by channel, store format and category.
Which should be our priorities for the following months?
Protecting the health of employees and customers all throughout the supply chain, from raw materials to the consumption and disposal of products at home, so that suppliers can reach distributors and sales channels following their health protocol. In this way, a lower probability of contagion may be guaranteed and the proper handling of products at the point of sale will be ensured, always taking the health of collaborators and customers as a priority.
Preventing contagion is the key to containing this situation and getting back to normal as soon as possible. The simplest measures are the most effective, like making sure everyone covers their faces and checking people’s temperature. For this reason, Pusher-POP / POS-Tuning has created two prevention tools for its customers: Smart Fever Control, automatic temperature check systems for points of sale, and protective masks for personnel.
Keeping stock of the assortment of products that are appropriate for each moment. This requires a close collaboration between suppliers and retailers to define a suitable assortment of products, as well as a certain flexibility of the supply chain to allow it to efficiently reach the points of sale.
This is a good moment to think about what is coming and adopt technologies that minimize the time that store employees spend in the lanes and avoid repetitive, low-value tasks. Stock control is a task that may me automatized and digitalized; Shelf Stock Control is one of the most powerful tools to make it possible.
Above all, business survival. And right now, cash flow is even more important than profitability. Suppliers should pay special attention to the benefits announced by the government and financial entities in each country to improve their liquidity.
Price and offers
The sensitivity of prices, which is a requirement in this business, will increase even though the situation was different at the beginning of the crisis. But as time goes by, households are beginning to pinch pennies and we see there is a tendency to try low-priced products and store-brands to save money.
Consumers will continue to try to save money while facing the uncertainty of the true economic effect of this health crisis.
Execution at the point of sale
With the limitations of collaborators at the point of sale, we must now, more than ever, try to be more efficient in the execution and monitoring at the point of sale. Therefore, we must partner with advanced technology apps for trade marketing, which allow us to achieve a greater efficiency in monitoring the execution at the point of sale and provide real-time information for timely decision-making. Solutions like those offered by Pusher-POP Smart may become an important ally for your field team during this period.
POSSIBLE CHANGES AFTER THE COVID-19 PANDEMIC
The impact this crisis will have on the economy and on retail is still uncertain. Once it is over, we should pay more attention to the habits of consumers and shoppers, as they will have just gone through one of the most significant crises of their generation.
Some of them will have had to try new things like e-commerce and electronic transfers, virtual communication, remote work, purchasing and trying new products and brands, incorporating new habits at home and socially, adopting new health and hygiene habits, etc. Others will have undergone fewer changes because they had already incorporated these habits and practices into their daily lives.
The truth is that these practices, habits and behaviors that already existed will have accelerated or deepened, and will be here to stay. Those who ignore them might lose their competitive advantage.
Changes in retail are here to stay.
- E-commerce. Logistics platforms and capacity will need to be strengthened.
- Electronic transfers and virtual means of payment will be essential.
- Predictive models with artificial intelligence for the supply chain.
- Self-check-out: checkout lanes with no cashiers.
- Automated e-commerce and home distribution platforms. Making the last mile more efficient.
- Execution technology at the point of sale for efficiency, control and adjustment of the investment in trade marketing.
- Adjusting product mix to the new needs, habits and behaviour of customers and shoppers.
- Developing environmentally friendly aseptic packaging that allows products to be traced.
- Developing store-brands: quality, health, environment and price.
Price and offers
- Price will continue to be a requirement to stay in business.
- Offers and other emotional offers related to the new needs and habits of consumers and shoppers.
- Joint development by retailers and suppliers of efficient products and solutions for the supply chain.
Consumers and shoppers
- Consumers and shoppers that are closer and more committed to quality, nutritional content, health safety, care for the environment and convenience of products.
- Integrated value proposal between the physical store and the (virtual) e-commerce platform. An example is Hema, an Alibaba supermarket in China, where shoppers can buy in different ways: physical store; e- commerce + delivery; physical store + delivery; click & collect (virtual and store pickup).
- Shopping experiences at the physical store and online are similar. Today, audiovisual technology, image and voice recognition, and artificial intelligence will bring shopping experiences closer to shoppers in both channels.
Business model and stores
- New hygiene and food safety protocols for handling products.
- Health protection for all collaborators.
- There will be more space in stores as assortment will be reduced to seek chain and e-commerce efficiency. We will need to rethink business models and see how other businesses generate synergies in the additional spaces.
- Powerful visual merchandising will be the key. From packaging to the way products are displayed.
- Strengthening home delivery will be essential.
- Seeking lower costs for services throughout the customer value chain.
- Developing work models that are flexible, supportive and close to employees.
- More efficient supply chain to reduce stock shortages as well as the costs of being present in all channels, especially the traditional one.
- Strengthening shopping and supply technology with artificial intelligence.
- Automated restocking and inventory control in the store in real time.
- Improving distribution centers to make them efficient for e-commerce channels.
All in all, what both retailers and suppliers have been doing correctly and efficiently so far will no longer be enough. The rules of the game have changed or, perhaps, what has changed is the game: we require a new value proposal that does not only considers the classic 4 Ps of marketing, but new variables such as health, the environment, traceability, social responsibility (solidarity) and, above all, CONVENIENCE, especially for the new generations (millennials and centennials) who sooner rather than later will rule the game.
What was going to happen between 2025 and 2030 is going to happen sooner. Nothing is new; it has only been accelerated.
Adapted by pos-visibility.
Source: clubdeltrade.com/ by Leonidas Oyaga.