Digitalization Can Strengthen Physical Stores

Q: What steps are you taking to digitally transform your group?

A: Our group is going through a complete digital transformation, applying many tools from Oracle. Our e-platform is from Hybris Commerce, which is based on Gartner’s Magic Quadrant. We also do a lot of things internally, developing our own tools. I believe strongly in developing our own tools because it equips our team with knowledge that is valuable to the company.  

Q: What role does e-commerce play in strengthening the offer of physical stores?

A: The digital space is very important. At the last company where I worked, we had special kiosks at stores equipped with tablets where clients could search the company’s complete product inventory. This provided the customer with greater options. It also represented a moment of discovery that adds to the experience of shopping. At Office Depot, our salespeople in the digital area have a tablet to access an inventory of all products. A vendor can create a profile of the customer and personalize the offer. In addition, our stores have Wi-Fi, which allows clients to download all the information about a product themselves. An advantage of working with an online catalog is that it also allows direct communication with third-party suppliers of a product to know when a product is available. There is a famous retailer in Brazil called Magazine Luisa where store managers can even adapt the price of products in real time by modifying the product portfolio on their mobile devices. This has worked very well for them.

Another part of our digital strategy in stores is our customer feedback system. We print a QR-code on each purchase ticket. The customer can scan this QR-code and provide feedback about their product and their buying experience.  

Q: How important is the physical store in an increasingly digital world?

A: Eighty percent of retail sales in Mexico still happen on the floor. For very large retailers in Mexico, e-commerce is still a small part of their business. You may wonder why, given that almost 90 percent of the Mexican population has a smartphone and access to internet. An important reason is security fears. People are afraid of receiving a product at home because they are afraid of burglary. They also fear they will not be at home or another person will not be available to receive the item. This is why some retailers work with convenience stores like OXXO, which holds onto the package until the client picks it up.

While the physical store will remain important, we will see big changes. Large retailers like Liverpool and El Palacio de Hierro will have to do things differently. Many retailers in other countries are reducing their number of stores and creating new ones with different formats, for example outlets or luxury branches. These smaller stores, in other words, will become more niche-focused.

Q: How do you facilitate the digital transformation in your company?

A: We have to change the culture of the company, either by evangelizing or letting people go if they cannot accept this new culture. Secondly, we need to implement technological tools. Lastly, we need to ensure that people actually put this new mindset and tools into action. This is done by implementing new work processes that require daily and weekly workshops to change habits. When I talk about a change of culture, what I mean is moving to a mindset of flexibility. Executives need to have the humility to express and hear the truth. A problem is that it is often those at the bottom who know which processes are necessary. Managers, on the other hand, do not know the exact tools that are required. They have fought hard to get where they are and change can feel like a threat to them. Juniors at the company, in turn, listen to executives.

Q: How are you improving the client relationship?

A: Office Depot has many corporate clients. But we approach every client relationship, whether corporate or individual, in the same manner. Our goal is to facilitate all their needs. This means we offer payment through different channels, we offer different credit payment plans and track the orders and inventory accurately. Our delivery service is one of the most efficient in Mexico and is at the level of Amazon. More than 70 percent of deliveries arrives the day after the order. In more remote areas, delivery can take two to five days, but in several cities we deliver in under 90 minutes. If your office happens to be right next to an Office Depot, we can have the product delivered to your office in 10 minutes.

Q: What are the essential properties of a customer app?

A: Digital apps need a high number of visits. They need to be useful in the day-to-day cycle of the client, they should create a meaningful experience and offer a clear value proposition. This means we need to provide many different services in the app that require understanding of the life cycle of customers. If a company sells motorcycles, the application should include the purchasing history of the client, maintenance services for the engine, suggestions for trips, videos about Ducati’s history, interviews with engineers of the bikes and news about the latest motorbikes. After a year, the company should send the client a key chain. This would be a way to engage with the client and create brand loyalty.

In Mexico, Office Depot is part of Grupo Gigante, a group that represents 12 companies in the retail, food and real estate sectors including Office Depot, Prisa Depot, Marchand Papeleria, RadioShack, Toks, Panda Express, Beer Factory, Shake Shack, Petco, The Home Store, Grupo Gigante Inmobilario and El Farolito