Arturo Vasconcelos
Deputy Director General
Grupo Chedraui
View from the Top

Chedraui: Learning to Navigate the New Reality

By Jan Hogewoning | Thu, 07/09/2020 - 11:24

Q: How are products and stores changing following the COVID-19 pandemic?

A: We are implementing many measures to make clients feel truly safe at our stores. Everything is frequently cleaned, including electric stairways and shopping carts. We provide disinfectant gel dispensers and we take the temperature of each customer before entry. At municipalities where authorities have asked us to, we have put up clear signs that instruct clients to use face masks and follow social-distancing norms. At the moment, these measures are here to stay. We see it as a positive. We want our clients to feel confident and have a sense of tranquility so they can enjoy their supermarket visit without feeling restricted by fear of contagion. We know that clients really enjoy coming to the supermarket, to touch the products they choose and to explore the variety. This is why it is so important to create a comfortable and safe environment.


Q: What changes have you observed in demand?

A: Customer habits have changed; they are prioritizing food basics. However, comfort foods have also been overperforming lately. Being at home for weeks, people want cookies, sweets and other joys. We also see that clients are cooking more at home. We put together some kits that can help them with this, such as bake-your-own-pizza packages with the pizza base and some ingredients. Two categories where we saw a contraction are anything related to mobility, such as car accessories, and beauty products. Spending more time inside the house has lowered the need for these items. There has also been a contraction in the area of clothes and electronics. However, the impact has been lower than we thought. Even though the pandemic is affecting people economically, they are still purchasing non-basics. We expect that the appetite for these products will bounce back to normal levels in the second half of the year or possibly the first months of 2021. Products that have seen growth in demand during the pandemic should remain strong for the rest of the year.


Q: Are you looking to expand your health product portfolio?

A: We believe that customers are still going to be worried about their health after the COVID-19 pandemic. We are looking at increasing our variety of food supplements, vitamin supplements and anything that our clients feel complements their diet. In the future, we could develop a variety of health concepts that offer different products as a package.


Q: What impact has the crisis had on customer purchasing volumes?

A: There has been a considerable reduction in the frequency of customer visits. However, when they do go, they are buying more. If we look at the average purchase per visit, it has gone up significantly. As a result, they are coming less frequently but buying more, so they are still spending about the same as before.


Q: How have you adapted your digital channels to address increased demand?

A: We observed a very big change in online purchases, especially for orders from particular stores. Many customers have made online purchases a regular habit, where it might not have been before. We have seen that our customers can adapt quickly to the omnichannel, as we call it. Normally, it would have taken a few years to reach the current level of online activity. After a lot of hard work, our online platform has become a lot more stable than it was at the beginning of the pandemic. The quantity of sales through this channel has doubled or even tripled compared to the same time last year. Supermarket visits will not disappear. Some customers will go fully online, while others will use both options. Some customers go to the supermarket and then use the online platform to stock up on particular items later on. Others are using the online platform for indulgence purchases, such as the wines and cheeses offered by our Chedraui Selecto markets. Our online platform offers customers the opportunity to search products from a wide catalog, which they really enjoy.


Q: What aspects have you focused on when it comes to delivery?

A: Our delivery model is based around the customer. We want them to find the products they are looking for at the best price and the list should be delivered complete, on time, with the quality they expect and the attention they deserve. This means attention regarding deliveries, which should respect hygiene but also make the customer feel appreciated. Our goal is to be more effective in this regard. This means delivering in less time or delivering exactly at the time the customer wishes. The customer should feel a high degree of confidence when ordering from Chedraui.

When customers visit our stores, they make unconscious or automatic decisions. They pick out their fruits and vegetables with preference to maturity and size. We want to offer the same feel with our online platform. Our delivery people specifically look for high-quality fruits, vegetables and other products. If a product is not available at the store when customers visit, they will usually pick something else. We want to implement this agility in our platform, so they can find these alternatives as well. The platform should not just be technologically convenient, it should also meet our standards of excellence. Third-party delivery platforms, such as Rappi and Cornershop, are essential allies in this process. Even when customers use these platforms instead of our own, they are still choosing Chedraui’s excellence.


Q: What are your expansion plans for new stores?

A: The plans we already committed to are still in place. We decide where to open new stores with a great deal of anticipation. It requires all kinds of processes that take time, such as acquiring the land. We want to serve clients well in the zones where we already participate. Chedraui is very strong in the center of the country and in the south, especially the southeast, where Chedraui is well-recognized. Clients know our stores and our service model. These are the preferred zones for further expansion. Opening a new Chedraui store in these areas is always very positive news.


Q: What are your main priorities for 2020?

A: This year, understandably, everything has changed. In the short term, the most important factor is to protect our clients and our staff. For the rest of the year, we want to continue meeting our commitment to society, keeping food available by keeping supply chains in place and meeting the new demands of our customers.


Chedraui is a publicly traded Mexican grocery and department store chain with 292 stores. It is the third-largest supermarket chain in the country, with a strong presence in the center and south of the country

Photo by:   Chedraui
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst