Slim's Adaptation: Grupo Sanborns Boosts its Online SalesBy Daniel González | Thu, 04/30/2020 - 16:57
Carlos Slim’s ability to adapt is beyond question. The richest man in Mexico and one of the most influential businessmen in the world has managed to diversify his economic activity in such a way that his companies hardly feel the economic crises, regardless of their impact. Whether it be technology, energy, infrastructure or finance, the speed at which his companies blend into the context they operate is a success story that has been analyzed globally. A good example is Grupo Sanborns’ retail unit, which includes Sanborns, MixUp, iShop, Sears, Saks Fifth Avenue and Sanborns Café, among other brands. According to the Mexican Stock Exchange (BMV), Grupo Sanborns managed to grow its online sales by 450 percent in 1Q20, becoming one of the fastest growing marketplaces in the country.
There are two main reasons for this success: physical stores have been closed for weeks and the government has advised its citizens to stay at home to prevent the expansion of COVID-19. Grupo Sanborns offers its customers an amalgam of pharmaceutical and technological products, as well as some food items, among many other products. The retailer has a website that has become a favorite of many. “The recommendation to stay at home to reduce the risks of contagion by COVID-19 caused consumer spending to focus the last two weeks of March on basic consumer items and not so much on fashion, perfumes and accessories sales. Technology sales also increased as a result of the home office set-up,” said Patrick Slim, the group’s CEO, in a statement sent to the BMV. However, despite the huge growth in online sales, the group presented a 1.4 percent drop in total sales as a result of the lack of in-store clients, which has mainly affected its fashion and accessories section.
Mexico is currently going through Phase 3 of the pandemic, considered the most dangerous phase and the one that demands the most attention from citizens. In Europe and other regions, plans to reopen the economy are already happening, as shown by the policies observed in Austria, Germany, Spain, the Czech Republic and Italy. However, there are no clear plans for Mexico despite precautionary steps taken by citizens and the private sector to establish a realistic recovery road map. Mario Bermúdez, Finance Director of Grupo Sanborns, told Expansion that 10 days ago talks between the government and the National Association of Supermarkets and Department Stores (ANTAD) began with the goal of finding a reopening plan that would be beneficial for everyone. ANTAND is considering reopening stores on May 17. Although based on information from European countries, this seems to be too soon and unrealistic. “The reopening expectation we have is subject to the instructions of the health authorities. For the time being, we are to comply with people acquiring essential items, such as body care, medications and telecommunication services” Bermúdez told Expansión.
According to Grupo Sanborns’ report to the BMV, in 1Q20 the company had total revenue of MX$11.3 billion (US$467.8 million), with a net income of MX$303 million (US$12.5 million). On April 3, Grupo Sanborns decided to close its 449 stores operating in Mexico. Initially, this decision was to be extended until April 30. However, the rapid expansion of COVID-19 in the country will force Carlos Slim’s retail group to extend the closing date of its stores. The positive numbers of its online stores could offer some relief to the business.