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This week’s Voices on the Ground features Martin Rosenzvit, Advantage Regional Director for the Southern Cone in Argentina, Peru, and Chile.

Martin discusses the changes retailers and suppliers have made to their businesses due to the epidemic, and how they are united more than ever in delivering to changing consumer behaviours.

For a transcript of this full interview, continue reading below.

Q1 - How are suppliers and retailers reacting to the crisis and the recent increase in cases of COVID-19 in the Southern Cone? Please also comment on the measures being taken to ensure people's safety when shopping.

In Chile, Peru and Argentina, we are among the countries with the most cases worldwide, and the fact that the pandemic occurred in other regions first has helped to provide us with longer preparation time. The epidemic required an extremely agile reaction from suppliers and retailers. Working together, collaboratively, they faced the front line with a common goal. This goal is to meet the needs of the end consumer, provide safety to their employees and shoppers, and supply the essential products required by all of society.

In the context of uncertainty over safety and hygiene, these are presented as two pillars to empathize to gain consumer confidence through their shopping experience. As a result, multiple protocols, communications and safety measures were defined at the points of sale to bring peace of mind to consumers.

In addition to social distancing, retailers and suppliers adopted the use of face masks and alcohol gels; additional personnel were made available for the cleaning and disinfecting of stores and controlled access to stores is exercised. Additionally, temperature checks when entering are administered, protective screens are visible at checkouts, and people over 60 years old are given priority attention in stores. On top of self-checkouts, new services were introduced, including scheduling purchases, reserving a time to shop in-store, and payment solutions using a QR code or virtual wallet – all helping consumers be able to make purchases with minimum physical interaction. These efforts required a lot of organization, hard work and a large investment from the companies involved.

Q2 - What is your perspective on the permanent economic impact in the region due to the crisis and the current poverty rates in the Southern Cone countries? Do you believe this could lead to a change in consumer spending?

When these global crises occurred, different countries were prepared differently. In ours, the impact is significant, and recovery may take longer than in more developed countries. According to the IMF, the economic contraction for Latin America will actually be 9.4 percent on average for this year, and a slight recovery of 3.7 percent is expected by 2021. However, at the consumption level there are a series of measures such as the issuance of bonds for some sectors of society or a percentage of early retirement from pension funds in some countries, which are intended to give a faster boost to the recovery.

Changes in consumption are associated, some with the economic impact and others with the habits of life in quarantine. On average, the industry, in general, has been affected. However, the in-home mass consumption products industry has, on average, benefited to the detriment of out-of-home categories such as restaurants, hotels and transportation. Among the former, essential foods, cleaning products, and personal care products have grown the most. Within the general consumption, products that offer immunity and health benefits and those that eliminate germs took great importance (mainly cleaning and personal care products). One habit, which grew with the pandemic, is to cook more at home; for this reason, products such as butter, milk, premixed flours or yeast had significant growth. There were changes in the distribution of sales between physical and online; similarly, a change in the frequency of purchase was experienced. In large stores, purchases have been spaced out, leading to less frequent trips and greater volume. On the other hand, convenience stores have experienced an increase in visits by shoppers.

As to economic impact, although there are multiple segments, we see two clear groups of consumers resulting from the pandemic. Some have not been affected by the crisis, and will surely be able to continue with more selective consumption, paying more for specific products with greater benefits. While others, an important part of the population, will see its purchasing power reduced. This segment will surely opt for a more austere consumption, cheaper products and in these cases (i.e. second and third brands, private label or own brands and in smaller package sizes). It will be exciting to understand how retailers and suppliers adapt their offers based on these new consumer needs, empathizing with this situation, rethinking their communications and offering the best mix of assortment and brands to succeed.

Q3 - What have been some of the most significant changes you've seen in terms of collaborative behaviour and actions between retailers and supplier partners? Do you expect these changes to continue once the crisis period has ended?

What I’ve learned from conversations with retailers and suppliers is that they were more united than ever in a situation that forced them to keep their distance. Agreeing that the only way out of this challenging situation is through collaborative relationships with their business partners, retailers and suppliers put aside their differences to focus on finding solutions.

We have observed a greater willingness to share information, more frequent and regular communication, greater transparency and more open conversations between partners. To cite one collaborative example that comes to mind, retailers who would typically receive orders at their distribution center requested by exception that suppliers deliver their orders to individual stores, to which they agreed to do so.

In the case of suppliers, who responded to the increased demand by focusing all of their efforts on producing a limited number of SKUs – this focus was understood by their retail partners. Another excellent example of empathy is displayed through the agreements that emerged between companies with a high level of industrial activity, adding employees from companies with a contrary situation to keep its staff on their premises. This happened with mass consumption manufacturers and retailers who partnered with companies in the automotive and restaurant industries.

You asked me if I expect these practices to continue once the crisis is over. What I have heard from suppliers and retailers is: “we hope that the proposals and ideas from now on will be built on these learning and not return to the old and familiar things we were used to.” In reading between the lines, we can derive that both partners want to move forward from this challenging situation, bringing with them the new forms of collaboration that have evolved.

Q4 - What is your perspective on how suppliers and retailers have built resilience and agility in responding to the crisis?

I think this situation has tested all of us. If resilience is the ability to overcome obstacles in difficult situations, what you can see is that retailers and suppliers understood that by joining together, they get better capabilities. Agility is explained as taking extraordinary measures and making decisions to generate actions and investments in record time. As we all know, one of the consequences of the pandemic was an exponential acceleration in the growth of e-commerce. The development planned for five years was achieved in only a few months. In doing so, a flurry of online orders put companies in the mass consumption, e-commerce and last-mile industry under tremendous pressure. Indeed, those who responded the best to this test are those who were the most agile.

According to several studies, most consumers plan to continue shopping online after the pandemic. The suppliers and retailers who take this opportunity to develop e-commerce as part of their overall strategy will likely achieve a sustained competitive advantage. Other evidence of retailer-supplier agility through the pandemic included: access to online express shopping; a reduced assortment of products to be received same-day; the practice of click-and-collect; the development of ready-made boxes or consumer kits of pre-defined products delivered faster, and the development of dark stores.

As a result of this situation, many suppliers and retailers have told us that they work on a 24/7 basis to respond to supply needs. All these actions have been implemented in record time, requiring significant coordination, effort and investment from the retailers and suppliers working together.

Q5 - Would you like to share any final comments?

I want to conclude by saying that many executives expressed uncertainty about the changes people will experience in what some call the new normal. One of the comments I heard and find interesting to share is that we will have to be more attentive than ever to the voice of the customer, a fundamental source of feedback for decision making.

It is no longer just about B2C or B2B, but about H2H. H2H is the human-to-human connection and the ability to put another in the center, be it a customer, a supplier, a consumer. As a result of the pandemic, people changed, companies changed, the world changed. In this scenario, we see that empathy is going to be a key element to listen, understand and attend to the changing situation and needs of others.

 

To watch a recording of this interview in full, click here.