By Flávio Boan, executive director of FALCONI
FALCONI has worked for over 20 years with Brazil’s largest retailers and some of the world’s major players, as well as with regional networks that have high local impact. Our experience over these years has shown us that when recovery cycles begin, companies that prepared and strengthened themselves during the crisis period come out in front and manage to capture a larger slice of the value added by the market’s growth.
Projections based on data released by the IBGE indicate that retail is expected to grow by more than 3% this year, in alignment with the GDP growth forecast. However, consumers are expected to start purchasing again without taking on large debts, performing a careful cost-benefit analysis. There are three factors that influence retail behavior: income, unemployment and price. Inflation-based wage increases tend to be lower this year, but job creation should be stronger. The overall situation is once again positive, with an estimated increase in job creation.
However, there are technological factors in 2018 that were not present in previous cycles and will set the tone for current challenges. Companies with large physical stores will be subject to even greater pressure from e-commerce, which will continue growing due to the influence of Generations Y and Z upon consumption.
Against this backdrop, many organizations are trying to set themselves apart from their competitors by investing in technology. There are studies which show that artificial intelligence is increasingly gaining strength, creating stores where it will be possible to buy everything without standing in line or paying in cash, but paying directly via credit card or other forms of digital payment. In China, money has already given place to electronic payments, and in Asia the QR Code is a form of payment that has been growing in popularity.
Understanding changes in consumption habits will also be decisive in relation to value capture in this growth cycle. The new generation of consumers prefers leasing, without much interest in owing the product; for this reason, companies need to adapt and offer cheaper products and services and new consumption experiences.
Consumers want broader sensations during the purchase and use of products, and companies are already starting to move in this direction. Various brands offer events inspired by films, attracting the attention of thousands of people. It’s not enough to satisfy and please customers; it’s necessary to make them identify with brands.
In 2018, the used product market is expected to grow even more. Re-commerce is projected to leap from USD 18 billion, reported in 2016, to USD 24 billion. There has been a trend of partnerships with used product websites, as well as assessing the success of previous collections and relaunching that which continues to hit the mark.
Within this context of dramatic transformation, good management practices will also be essential for the survival of organizations, particularly retailers. Managerial skill will determine the ability of retailers to solve new problems and prosper in this new market. It is necessary to cultivate the teams that will make these changes come to pass. The secret of companies who are prepared for constant change is discipline in carrying out plans.
The PDCA (Plan, Do, Check, Act) method is simple and easy to understand. However, its everyday application is complex and its use by all takes a few years to occur. Everyone stresses the importance of planning in the management method. Nevertheless, discipline in assessing execution of actions and achievement of goals – with positive consequences for those who make it happen and negative ones for those who do not –is the secret of success. This makes using PDCA an important tool for change.
Source: Super Varejo magazine – March/2018