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PULSO ESTRATÉGICO 2014


Every Business is a Digital Business

The small shops too.
By Tomás Rodríguez
Senior Product Manager
Accenture Mexico

Today, every business is a digital business. The world is changing around us, and Information and Communication Technologies (ICT) are driving a significant part of this metamorphosis.

Mobile devices have taken the market and enable us to be permanently connected, anytime and anywhere. The percentage of the population connected to the Internet will continue to grow rapidly. The integration of digital technologies into companies and organizations across the country will have an impact on productivity, growth and profitability. The right combination of the different elements of a business with new digital technologies allows value to be created through the replacing of physical resources with digital ones, decision-making in real time, more extensive and accurate leverage of information, and use of flexible and easily scalable platforms. This provides companies with big opportunities to increase their efficiency and agility within their industries. Accenture’s study “Digital Mexico: the Path to High Performance,” shows that 97% of corporate decision-makers surveyed believe that digital technologies should play an important role in their business strategy, and that 74% of employees in Mexico believe that the companies they work for should make better use of digital technologies within no more than three years. Companies should, among other things, aim to:

  • Learn and develop new and more robust information analysis and intelligence generation capabilities.

  • Define business processes and establish means which enable continuous collaboration between employees, suppliers, agents and customers.

  • Integrate digital technology so that functions that support the business can be made more efficient.

  • Reimagine their customer management model and move away from transactions and towards individual relationships.

  • Use mechanisms and systems that allow for real-time decision-making.

Within this transformation of business based on the use of digital technologies, where does the corner store stand? Do small stores need to transform digitally too? What should they do, and how? If they didn’t, what impact would it have?

The Differentiating Element
Corner stores base their value proposition on convenience for customers or proximity to them, as well as being able to forge much more personal and intimate connections with them than can be achieved by other types of establishments. As such, owners of small stores and storekeepers establish themselves as part of the community and know most of their customers by name. Because of this personal connection, storekeepers remember their customers’ past purchases and preferences, which allows them to make highly appreciated recommendations, succeeding in differentiating themselves from the competition and maintaining their most important customers’ loyalty.

In the last few years, many retail chains have exploited the convenience proposition by developing formats for meeting customers’ need for staples, and have managed to expand their presence by successfully and rapidly multiplying the number of points of sale that use these formats. Similarly, for some years now large supermarket chains have been developing smaller store formats which they can operate profitably in areas where a larger store would not survive. This has created a direct threat to small stores, since value propositions based on the concept of convenience have multiplied and customers are finding different options near their home or workplace where they can not only obtain goods, but also access certain services, such as phone top-up, cash withdrawal or payment of a number of bills. There will be small stores that are under less pressure due to the type of market they serve or the products they offer, but the tendency is to compete directly with chains.

CHAINS ARE GETTING CLOSER TO THEIR CUSTOMERS
The next step for the major supermarket chains is to recover a more personal knowledge of their customers and gain a stronger bond with them through shopping experiences tailored to their needs and preferences. To this end, they are developing new capabilities such as multi-channel and analytics, leveraging digital technology and the rapid increase in the use of technology by shoppers in all their daily activities. This represents an additional threat to small stores and grocery stores, as their added value in relation to greater proximity and knowledge of their customers could gradually be replicated, totally or in part, by the large supermarket chains or convenience stores, with the added benefit of being able to recognize customers in any of their branches, and not only the one they visit regularly. How should corner stores respond to this new threat, which will begin to take hold in the next few years, particularly in the segment of young consumers, who are so strongly connected with new information technologies? It’s a big challenge. Overall, some small stores will be under less pressure due to the type of market and geography they serve, or the type of products they offer. However, the trend is clear, and it is envisaged that more and more small stores will have to compete closely and directly with large retail chains.

THE ROLE OF TECHNOLOGY
The way in which small stores must respond and compete is by improving point-of-sale management, expanding services, developing their links with their customers and their knowledge of them, forming collaborative alliances among themselves and looking for greater support from suppliers of goods. In these five concepts, technology plays a very relevant role, leading us to conclude that small stores should begin to increase their level of digitalization, just as large companies are doing. In order to achieve this, they will likely have to depend on the support of their suppliers a great deal. When it comes to point-of-sale management, they should consider incorporating systems that help them log sales and control inventories, incorporating the use of barcode readers, systems that support the management of offers and promotions for cross-selling and/or administration of loyalty programs. They should have point-of-sale terminals, which can now be created by adapting a smartphone with a reader device, for receiving credit cards, debit cards and food coupons. Similarly, they should have access to the Internet in order to increase connectivity and communication with their suppliers and customers. Small stores should offer new services such as home delivery of orders placed by phone or online, or the option to collect an order placed through these channels in-store, strengthening the concept of convenience. Developing an app that customers can download on their cell phone, and thus maintaining a closer relationship with them, is not that complex. As different small stores manage to join together, it will be easier for them to offer such services. Today, every business is a digital business. As small stores manage to adopt new digital technologies in the right way, they will withstand the threats posed by large retail chains.

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