We brought together 3 industry experts to share their vision of the new reality and what is to come in the post-COVID 19 era.
Eduardo Castro-Wright, former vice chairman Walmart Global, Alberto Moriana, VP Sales LATAM Procter & Gamble and Johann Ramberg, CEO Tottus Hypermarkets (Falabella), shared with us their experiences in facing this unprecedented challenge.
Find the full content of the panel here.
How to face the new challenges?
E-commerce is here to stay. According to a study by Kantar, after four weeks of confinement since the beginning of the COVID-19 pandemic, e-commerce penetration in Latin America grew 387%. Experts say they saw a two- to three-year surge in online shopping in just weeks, bringing enormous challenges for supermarkets and other retailers. Below, we analyze the pandemic's impact on the sector and how supermarkets can face the new challenges coming their way.
1. Migration to a "one-stop-shop" format
Before the pandemic, most consumers took the time to go to various specialized formats to buy the different products they needed. However, as observed in China, Europe and now in Latin America, this new reality completely changed this trend: at the beginning of the pandemic, consumers made their first large purchase of supplies in hypermarkets or department stores and gradually, due to mobility limitations and prevention of virus infection, they migrated to smaller proximity formats. But not just any convenience store format, but the so-called one-stop-shop, where they could find everything they needed (fresh, basic food, cleaning and hygiene and beauty products).
"Things like product availability are gaining a lot of relevance right now: if the consumer leaves the store without 4 of the 15 products he wanted to buy, and is forced to go to a second store, this will certainly generate dissatisfaction (...) in addition to wasting time, he is also risking his health." -Alberto Moriana, VP of Sales LATAM for Procter & Gamble.
2. The new role of technology in the industry
During the crisis caused by the pandemic, e-commerce boomed in all its formats (last mile, brick-and-mortar, marketplace and click-and-collect), but many of the retailers were not prepared, and have faced great challenges due to the magnitude of the demand. If companies do not have sufficient personnel, logistical and technological resources, meeting demand in an optimal way is almost impossible.
"It's time to rethink, through technology, absolutely all the traditional processes in companies: from meetings, travel, entry and exit controls, signatures, routes (...) In general I think that technology, although already relevant, went from being something that made life a little easier to something that makes life really sustainable within the company", says Johann Ramberg, CEO of Hipermercados Tottus.
Now more than ever, it is vital to migrate towards the use of technology that helps solve supply chain challenges, especially in the last mile (which is the most complex stretch), inventory management and communication with the consumer, and how to bring them closer to the retailer, among many others.
3. Learnings from the experience in China
The behaviour of retail sales in China after the confinement has taught the whole world that trends are almost back to pre-CVID-19 normality, minus the online trade which is expected to remain at a level very similar to the boom experienced during the pandemic. For example, "in Procter & Gamble's drugstore/perfume/hygiene category before the crisis 30% was already moving online, during the crisis 30% moved to 50% and a month and a half after the end of the lockdown it has dropped a little bit but we don't think at any point this is going to go back to 30% but it is going to stay somewhere between 40% and 50%," says Moriana.
The crisis caused by COVID-19 affected all retailers in different ways, bringing new challenges and changing consumer trends, but one thing that is the same for the entire industry is that e-commerce has skyrocketed worldwide and will not return to pre-pandemic levels. Now supermarkets and other retailers must embrace these new consumer buying trends, adapt to the high and growing level of online shopping, and adopt the best human and technological resources to meet the new needs of consumers.