We’ve talked about how new technologies increasingly empower well-informed consumers who, in recent years have changed the way they buy, the way they decide how and where they will spend their money and their expectations regarding the brands they buy. This trend is one of many fundamental transformations that global retailers face today and hence we believe that companies focusing their efforts, not only on servicing customers but on understanding each customer – what they want, what they like and how do they buy – are those that will succeed in the coming years, fostering new ways of doing things, drawing upon their ingenious and their ability to innovate and resorting to every available technology related-resource.
Understanding customers means accepting that they are no longer compelled to buying exclusively what they can find on the shelves of physical stores, nor going to the supermarket and walking along every aisle. The above does not mean that they no longer like going to the store or that physical stores have lost their purpose: although until recently many predicted that the arrival of on-line services would do away with brick and mortar, this hasn’t been the case. Customers still enjoy their experience at the store, however, today’s customers do not have a preferred channel: they may buy a product in store and another on-line, they will go and pick up what they pay on-line, they bounce from one app to another in search of options before making their final decision, they carefully select which brands, objects and experiences are worth their while to actually visit such store. In order to offer experiences, products and services that are pertinent for these customers, retailers have begun to use all channels strategically. Following the brick & click model, traditional players have began to offer on-line services, and those that began as digital stores are opening physical stores thus, strengthening a system that enables servicing customers, offering them an almost personal buying experience.
The omnichannel system is still incipient in our country, which currently undergoes an initial phase in this imminent transformation (a transformation we cannot lose sight of, as it will tend to happen a lot faster than in developed countries). We experience glimpses of what’s coming with the entry of new players offering different alternatives challenging outdated rules of the game. Apps such as Rappi, Merqueo, Airbnb, Uber, Beat, Cabify and Didi and hard discount such as D1, Justo y Bueno and Ara, established successful new stores as evidenced in revenues amounting to COP$7 trillion at the closing of 2019 in the three former hard discount chains previously mentioned. These earnings are at the expense of traditional players. Cencosud has been the most affected, followed by La 14, Casino (Grupo Éxito, Carulla and Surtimax) and Olimpica. Corner stores have also been affected, but their survival is not yet at stake as they are experts in offering convenience to their neighbors with whom they have a close relation, knowing what they like and offering all types of products either delivered to them or just a few blocks away from their homes.
These figures show that although the reactions of many local retail players are still pending, expectations of Colombian customers have indeed changed according to global trends. In an article published on 5 January in the Colombian newspaper El Espectador, Camilo Herrera, President of Raddar Group, explains that our consumption habits have changed and when buying, one of the things that Colombians value the most, is the time they save in every decision made. Herrera further stated that, “basically, when people order a home-delivery by phone, chat or app, they are really buying three things: product, service and time.”
Even though this isn’t the standard yet, there are retailers in our country that have reacted rapidly. As an example, let’s analyze the consumption of fast-moving consumer goods brands, with new concepts such as Éxito Wow, Carulla Fresh Market, Carulla Smart Market and Surtimayorista, Casino group began to take action back in 2017 to become a retail player in tune with the needs and habits of contemporary customers. They understood that this change is not about closing supermarkets or automating digital processes, it’s about offering a complete, convenient and cross-cutting experience and the actions taken in that direction have rendered results fast: the organization has not only managed to increase tenfold its sales in e-channels, but it has also shown the value of designing unique experiences in its stores. These two new formats, Éxito Wow and Fresh Market have shown two-digit growth rates in 2019, after being in operation for a bit more than one year, which has further motivated Casino to expand these initiatives. Éxito Wow, which initially opened in Envigado on September 2018 has now four stores in the country, and Fresh Market, which opened its first pilot store two years ago in Bogota, has been implemented in over 12 stores across the country and they expect to open 10 or 12 more of these formats in 2020.
During 3Q 2019, Casino continued innovating with two additional projects. The first one consists of its Surtimayorista stores, thought out as competition to hard discount formats and just a few months after their implementation, they have shown positive ebidta, results that brands such as Ara, Justo y Bueno and D1 have been unable to achieve. On the other hand, Carulla Smart Market began operations in December 2019, conceived as an innovation lab, where applied technology is put to the test to offer time and convenience to its customers. Just as the rollout of the Fresh Market and Éxito Wow models, Smart Market could expand to other Group stores ideas such as payment by facial recognition (a state-of-the-art technology only implemented in China), the interactive map at the entrance of the store shows the route to finding the product we seek or lockers where clients may leave packages to be picked by others.
These are some examples where AI, Internet of things, augmented reality, virtual reality and robots have served as tools and have induced endless opportunities to design unique experiences based on habits and needs, to make the life of our customers easier and offering all types of buying experiences and ways to save time. We encourage you to think about the fact that we, as businesses have market knowledge and tools required to face this customer-driven economy trend at our reach, which will further strengthen in the coming years, and most importantly, we are just on time to react and change.