Catering to a Variety of CustomersBy Jan Hogewoning | Wed, 03/11/2020 - 10:12
In a segment with stiff competition from big players, companies must learn to recognize the opportunities that different clients provide. Fernando Velasco, Director General of Kiosko, believes there are different ways to catch a customer’s eye. “You need to appeal to both the customer who is there to grab a quick coffee and the customer who does not yet know what he will buy,” he says.
The Kiosko group has more than 500 convenience stores in Jalisco, Michoacan, Nayarit, Sinaloa and Colima. The company started in Colima and its headquarters are still there. Initially, Velasco says Kiosko did not find much competition in these areas and only began to see more when they expanded to urban areas like Puerto Vallarta and, recently, Guadalajara. The company’s expansion has been organic and has remained mostly regional, although it does see the whole country as a potential market. “Organic growth, not overly aggressive, has allowed us to get a footing and build a brand,” he says. In terms of financing, the original group grew under the Coca-Cola bottling company’s wing in Colima and since then, Kiosko’s operations have been fully self-funded. “This has given us a certain amount of freedom to choose our own path,” Velasco adds.
Kiosko has developed successfully despite stiff competition from giants like OXXO and 7-Eleven, growing at a faster rate than these major competitors. Its annual growth tops 20 percent. One of the advantages, according to Velasco, is that consumers are more concerned about the proximity of the store than about which brand they are buying. “Particularly among convenience stores, where people go to buy things -on-the-go, there is not a lot of loyalty,” he says.
However, Velasco is still convinced that Kiosko has to create an experience that is different from other convenience stores. There are several characteristics that already stand out. First, the company is associated with a certain region of the country, where it has created local recognition. In addition, Kiosko has its own brand of products “Developing our own brand remains a priority,” says Velasco. “Finding products that really differentiate your offering is a challenge.” The company constantly has to follow consumer tastes and needs. This includes exclusive deals with brands, as well as products that are not yet offered in convenience stores. Velasco also points out the importance of the design and layout of the store. “We want something colorful and innovative,” he says.
Kiosko has also delved into services such as movie tickets, tuition fee payments and transport tickets. Another service that has emerged in convenience stores is banking, including money deposits. Although Kiosko already offers this service, Velasco points out a risk. “It is very important that services like this do not create long lines at the counter. This can drive clients to stores that are just around the corner.” For Kiosko, it is critical being agile, fast and accessible.
Home deliveries are another area of interest for Kiosko. However, this introduces a new field of competitors, as there are third parties that deliver from convenience stores to the customer’s home. According to McKinsey, the online food-delivery market grew at a CAGR of 25 percent between 2015 and 2018 and is expected to grow 14.9 percent between 2018 and 2020. Meanwhile, Startup Universal, highlights that a combination of wage inequality, migration, high population density in big cities, lack of proper transport infrastructure and a rise in mobile technology have created the perfect storm for food-delivery platforms to spike in Latin America. Velasco believes strongly in maintaining contact with the client, but the delivery trend is driving consumers away from physical stores. “The challenge is to maintain direct communication with clients. These personal relationships do have the potential to create a bond with the brand.”
To this end, Kiosko has developed an adaptive strategy in which its own staff members make the delivery. An advantage for company is that many of its stores are located in areas where there are not yet third-party delivery companies. In areas where they do exist, Velasco says Kiosko must make a significant impression with their products so clients will remember the company even if the product is delivered by another party. He hopes to make greater use of social media to inform customers of unique promotions and products that differentiate Kiosko’s shops. “Ultimately, clients who order from home will remain a segment, apart from those that come to the store to pick up a quick coffee or snack and another that prefer to stop by our stores because they really enjoy the shopping experience Kiosko offers,” he says.