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By Mara Santos, consultant at FALCONI
After surviving a tough recession in 2015 and 2016, various companies invested in innovations throughout 2017 to surpass customer expectations and start growing again. It was crucial to make the purchase experience of shoppers more agile, interactive and pleasant, conciliating visits to physical stores, e-commerce and sales via social networking websites and applications.
In this context, food retail has been excelling. To create bonds with customers, encourage consumption and, consequently, boost revenue, major chains are investing in increasingly modern strategies and initiatives, ranging from personalized promotions and loyalty programs to systems that use cameras and artificial intelligence and image recognition technologies to identify which products consumers seek the most in stores. However, thecash and carry format is still lacking in terms of technology and interactivity, maintaining its focus only on high volume sales and aggressive prices.
According to Euromonitor International, the cash and carry model grew 11% in 2017, as opposed to 3.7% growth in food retail, which includes supermarkets, hypermarkets, convenience stores and food and beverage specialty stores. This result makes complete sense, since economic uncertainty is translated into customer insecurity, leading consumers, above all, to search for lower prices.
However, with economic recovery underway in 2018 and slight growth in consumption, the chains that are investing in Advanced Analytics for increasingly customized and assertive commercial initiatives that provide a better purchasing experience for their customers will fare the best. This is a strategic and promising way to increase sales, build customer loyalty and consolidate brands.
Income, job and price
Along with the shopping experience, there are three other factors that have been mentioned in surveys conducted by Kantar Worldpanel that raise the performance of wholesale and retail channels: income, job and price. In this sense, commercial intelligence and store operations can be oriented toward results when shopper behavior is understood.
The expectations of people looking for promotions, for example, are met when they enter the store and find the products they most consume at lower-than-market prices. This delight leads them to add other normally priced items to their shopping carts. Therefore, the company not only increases its sales volume, but ensures a gross commercial margin.
A recent loyalty format that exceeded customer expectations was the launch of the loyalty program of the Pão de Açúcar Group, which publicizes, on applications, categories with up to a 50% discount, in customized lists based on the purchase history of each shopper. Underlying this strategy are promising advanced analytics.
However, to effectively execute strategies and enable reactions in a few minutes, according to market movements, it is necessary to have highly qualified and engaged teams in the organization (commercial, store operation, logistics, maintenance and supply sectors, among others). This requires the involvement of leaders.
Leadership is essential
Professor Vicente Falconi describes in his book “O Verdadeiro Poder” (“Real Power”) three essential factors for achieving results in any human initiative: leadership, technical knowledge and method. It’s worth noting that leadership is the main pillar, which is responsible to make plans happen. Companies that have employees with high technical knowledge and plans developed for all hierarchical levels, but lacks leaders, will face serious difficulties to ensure the survival of the business. It is important to stress that good leaders exercise their responsibilities through example, not by words, and this is what inspires their teams to pursue results in their daily activities.
Well-established policies and standards must also be defined in order to guide the work of leaders and the entire operation1. For example, the head of the meat department in a supermarket must train the whole team on the best way to cut meat, according to the standard for each item, ensuring that their work reduces rates of loss (or breakage) and increases sales volume. After training them in the standards, the person in charge must check daily that everyone is carrying out their tasks according to the training received and if results are being achieved.
This is the infallible recipe for an operation to work well1. Besides financial results, customers will be satisfied and will take home quality meat, with the certainty that they are paying for the cut requested at the counter.
In addition to the responsibility of training and confirming that standards are being implemented, it is the responsibility of the operations leader1, when daily results are not being achieved, to analyze deviations and identify causes together with the team, which would know better than anyone else in the company the causes, for example, of falling sales in rump steak or whole pieces of pork loin.
After careful examination of the causes, it’s time to turn the situation around, through quick, effective actions under the staff’s authority. Blaming only the manager for unsatisfactory results in each sector is a serious, but common mistake in most companies. Failure to correct this anomaly will result in slow recovery in terms of results.
This mechanism for analyzing and treating results, when well-honed and involving all the company’s employees, empowers leaders and motivates and engages people from all departments, through healthy competition to achieve the goals. This enables the company to recognize each employee’s performance according to their accomplishments.
1 This is related to the company’s operational level, i.e., who performs tasks in the day-to-day routine and generates results. The store operation, for example, is made up of those in charge of each sector (meat, bakery, grocery or fruits and vegetables) and shelf stockers, butchers and assistants in the sector. The commercial operation is composed of shoppers and purchase, pricing and marketing assistants.
Source: SuperVarejo magazine – Better Management Column – May 2018