News Article

Traditional vs. Disruptor: The Battle for the Future of Shopping

By Miriam Bello | Thu, 05/27/2021 - 14:35

You can watch the video of this panel here.

While digital companies ponder the next step to increase their market share, traditional supermarkets want to get customers to visit their online shops. The balance between the physical and digital experience is key to engaging consumers, agreed experts at Mexico Business Forum 2021 Virtual Edition held on May 27. During the panel “The Battle for the Future of Shopping: Traditionals vs. Disruptors,” e-commerce and traditional retail leaders discussed consumer habits shifts and how to build a hybrid future that focuses on fulfilling and exceeding consumer’s expectations on supermarket shopping.

The pandemic made online shopping a staple for many Mexicans and e-commerce keeps growing by leaps and bounds. In 2020 alone, the supermarket category in e-commerce grew by 40 percent, reports the Mexican Association of Online Sales (AMVO), while e-commerce as a whole increased by a whopping 85 percent during 2020, said Roney Almeida, VP of Sales Mexico & Central America at VTEX. These circumstances pushed “business leaders to create agile strategies to transform their retail offer,” said Almeida.

“2020 was a complex year,” explained Arturo Vasconcelos, Deputy Director General at Chedraui. “The changes surrounding purchase dynamics detonated shifts our operations as many of our clients radically changed their consuming habits.” Vasconcelos explained that Chedraui had to strengthen its digital offer to respond to the shift and stay relevant during the digital transformation. “This year, however, consumers will also adapt habits. We have understood these changes and are trying to build an ecosystem with our commercial partners to continue enhancing Chedraui’s value offer,” said Vasconcelos. Digitalization needs to perfectly meet the costumer’s expectations, he added, which is what happens at in-person shopping.

Alejandro Solís, Director General México at Rappi, reiterated that “e-commerce retailers need to stay relevant and keep adding value to their offer”. To do so, Rappi is investing in customer service and developing predictive models that will allow the company to identify and understand clients’ bad experiences, even if they decline to share them with the company. “We are analyzing data to improve the company’s sales and efficiency,” said Solís and highlighted that online grocery shopping is all about good quality pictures, smooth payment transactions, clear product description and fast delivery times.

Consumers still prefer to have direct, physical contact with the product they buy, explained Alejandro Sisniega, Chief Commercial Officer & Co-Founder at Jüsto. In grocery shopping, he explained, it is essential to have an excellent offer that meets clients’ expectations and generates the same emotions that having physical contact with the products would create. “One of the first problems we had is keeping (consumers) in contact with the product. This is why choose to create a complete costumer experience for products such as fruits and veggies.  Spaces have been one of our greatest challenges as compared to big supermarket chains, ours are very limited. However, this does not affect product variety.”

A broad variety of products is also essential to attract and retain customers, said David Miller, Country Manager México at Amazon. Through a wide variety of products, customers are more likely to find something that meets their needs. “It all begins with the product selection. We at Amazon offer over 50 million products,” said Miller. Moreover, online retailers should also prioritize fast delivery, he added. “People’s expectations circle around fast delivery, which is something we continuously improve.”

“Low prices are the ultimate goal for retailers, online and in-person,” said Cui Arroyo, VP eCommerce Operations at Walmart Mexico. “Price competitiveness is the core of our offer and the base of our approach with commercial partners.” During 2020 and 2021, Walmart Mexico evolved from traditional retail into an omnichannel provider.

While it seems that the companies are the ones driving change, that has not been necessarily the case. “(Companies) are not the ones propelling the change, we are moving alongside clients’ preferences,” said Arroyo.

“This period is not a new normal; it is a transition,” added Marco Casarin, Country Manager México at Facebook. Companies are still adapting to the consumer habits, he highlighted, and they have discovered that tech allows them to monetize of products, services and experiences to deliver more innovation than traditional companies. “Digitalization is a need, not a choice. In 2020, sales from Mexican SMEs shrank by 48 percent but 36 percent of them stablished an online presence.” About 88 percent of these SMEs choose Facebook to begin selling online, he said, while the rest chose Instagram or WhatsApp. Moreover, 74 percent of these companies did not use tech experts to begin this journey “Facebook is democratizing tech access and allowing companies to survive by consolidating their digital offer.”

“Markets have their moments; people used to prioritizing price, comfort and convenience but today they prioritize comfort and convenience over price,” said Almeida. To find what the consumer will want next, companies could use data analytics, explained Vasconcelos. Through data analytics, companies can generate strategies that focus on the medium and long-term issue, while they fulfill big picture goals through adaptability and respond to lifestyle changes. Data analytics will drive the ecosystem to evolve and develop other concepts like social commerce and community buying, agreed Sisniega. “By assessing the power of data, we can register the interaction and translate it into better experiences,” Sisniega concluded.

Studying and learning will make the difference ultimately, said Arroyo. “We need to stay curious and experiment, fear of failure is what keeps us conservative. We need to try new thigs to really disrupt the market.”

To grow and build brand loyalty, companies should seek excellence in critical purchasing factors, integrate new experiences in a hybrid world, employ their natural ability to create communities, enrich hybrid purchasing with high innovation and permanently innovate, explained Casarin.

Miriam Bello Miriam Bello Journalist and Industry Analyst