Photo: Director of Transformation at Iconn, Abraham Ibarra. Credit: Courtesy of interviewee.
By Sara Elisa Fernández
2020 was a truly unprecedented year for retailers, who were forced to adopt trends that would have previously taken years to implement if the COVID-19 pandemic had not upended our lives. Fortunately, unlike other sectors, the retail industry has shown great resilience: it has been able to adapt successfully to the demands of its customers by combining e-commerce and physical stores.
A great example of this adaptability is Iconn, a Mexican conglomerate of companies including 7-Eleven (convenience store and pharmacy), Petro Seven (fuel operator), MAS Bodega y Logística (grocery and general merchandise distribution) and MercaDía (convenience stores), whose purpose is focused on making people’s lives easier, aiming to achieve customer’s preferences one by one.
Innovation is essential for any company that wants to improve its supply chain. As Director of Transformation, you have been responsible for spearheading this change. How are you addressing these challenges in your organisation?
At Iconn we are well aware that we have to meet the ever changing needs of our consumers as quickly as possible. The pandemic has motivated us to focus even more on anticipating what the customer is looking for. In this sense, harnessing technology to integrate the demand chain has been very important in speeding up product delivery. We are also working on processes which will make our partners’ lives easier as well as integrating operations across our companies.
In addition, we use agile methodology at various other points to deliver results quickly and in an incremental way, right up until when we implement platforms. Agile is going to be the future buzzword for excellence in business.
What advice would you give to other peers who find themselves in your situation?
I would tell them to get out their comfort zones. If we are not constantly challenging the organisation we work in, we are not doing enough. The decisions that we make in our projects must challenge the status quo: only then will we be able to change the way we do things and transform our company. For example, when it comes to integrating the demand chain, we have had to make many uncomfortable decisions because people are used to doing things in a traditional way. But I insist that we should not stay in our comfort zone, even if that means having difficult conversations and making different teams uncomfortable.
CEOs are sometimes too cautious when trialing new business models. The pandemic must make management teams realize that they need to broaden their perspectives, speeding up the delivery of technology and promoting innovation practices. Only then will they be able to be at the forefront and act quickly on what our customers are asking for.
In the MIT Technology Review in Spanish we say that “remote living is here to stay”. What changes has your industry seen?
During the pandemic more than 80% of Mexicans changed their consumption habits. The rapid adoption of technology and online platforms for doing business driven by mobility restrictions has led to a huge increase in sales through online channels.
In addition, at Iconn we have accelerated the transition to remote working. Before the pandemic, the number of people in head office or working remotely was in the single digits, whereas now we are close to 95%. Within a couple of weeks, most of the main team went home. It was a challenge for us because, by having a physical presence, there are a lot of people who have to continue to provide a face-to-face service, so we invested a lot in creating a safe work environment. As a result, we were able to maintain a hybrid working model, which over the course of this year has proved extremely successful.
In Iconn companies, face-to-face meetings can be crucial. How do you think digital transformation can help to offer a quality service while adhering to public health measures for COVID-19 prevention and control?
Iconn will celebrate an important milestone in 2023 – 100 years as a successful business. So, in 2019 we designed a roadmap to define what transformations should be achieved before that anniversary. Two years ago, we already knew that we wanted to go omnichannel, which is essential for the customer to have an excellent and similar experience whether they go to a shop, use the application or order a delivery. While the creation of this experience was going to take three or four years according to our initial roadmap, following the onset of the pandemic, we had to make some deliverables in just a few months to meet the new needs of our customers.
As for our on-site team, we are trying to take the utmost care of our employees. We know that if they are not in safe working conditions, we cannot continue to maintain the traditional channel. For this reason, we have made the use of masks and antibacterial gel mandatory, in addition to placing physical protections and acrylics to create physical distance between our employees.
What role will artificial intelligence play in advancing the retail sector, and specifically automation?
The pandemic provided fertile ground for process automation. We are investing heavily in turnover, one of the most challenging indicators for us. At Iconn, we have 22,000 employees, 17,000 of whom are on the first line of contact, where turnover tends to be very high.
The application and artificial intelligence allows us to work with artificial intelligence bots, where the first contacts with candidates are made automatically. Through these, we are able to identify which is the closest point to a candidate’s home in order to offer them the best opportunity for their demographic profile. This implementation of technology and use of data through artificial intelligence has helped us to improve retention indicators and we are convinced that this is just the beginning. As this automation process gets smarter, the numbers will increase. Automated processes will open up new avenues for us, although we will always maintain, to a certain degree, some traditional recruitment channels because there are people who do not continuously have access to a telephone or the internet.
Another major corporate trend is sustainability. How can innovation contribute to a group like Iconn in order to improve its social responsibility and work towards achieving the 2030 Agenda?
Sustainability, which is what will allow us to survive over time, is one of Iconn’s key priorities and we divide it into three core ideas: People, Product and Planet. Iconn’s Sustainability Strategy is aligned with the Sustainable Development Goals of the United Nations 2030 Agenda, mainly focusing on three of them: number 7 (affordable and clean energy), number 11 (sustainable cities and communities) and number 17 (partnerships to achieve the goals).
Without people, our company cannot exist, so we take care of our customers and our team. We are working on the ‘i-Flex’ program, which seeks to promote flexible work schedules to support a better work-life balance. In addition, we promote development integral to each of them, accompanying our employees during important moments in their lives, such as the birth of a child or a wedding, through financial support and days off.
One of our goals for 2023 is to have an approved health and wellness program that will allow us to strengthen our security operations and quality of life. As for Planeta, we are looking for efficient equipment so that each store and service station has the smallest possible carbon footprint. We also have very good lighting thanks to modern, energy-efficient equipment. We are considering renewable energies, such as solar and wind, as options to power our stores, and we work closely with certifications, such as LEED, to meet the highest efficiency standards. Our goal for 2021 is to reduce CO2 emissions by 7% and increase our clean energy consumption to 67%.
We are also investing in a lot of technology and innovation, promoting recycling, reusing and waste reduction. A few months ago, we removed all plastic bags, and coffee cups, which were made with hard-to-recycle materials, have been replaced by others with a lower impact.
How is Iconn preparing for the possible emergence of new competitors? What do you think is the differentiating factor of your company when facing competition?
The most aggressive competitor for our industry is the one that does not have to enter in a capital-intensive way, in other words, platforms that do not require a physical presence, such as Amazon. They are reaching more and more people and despite investing heavily in logistics, they are not doing so in a physical facility at the moment, although they have started some pilot projects. However, the fact that Iconn has this duality makes us competitive, because where we really make a difference is in our service: we take great care to provide excellent customer service, we always try to ensure that there is good hygiene, that all products are available and that there is excellent lighting. Another main competitor is the Colombian delivery company Rappi. We have managed stay close to them through a partnership, so that they can help us to do our home deliveries.
How do you envision the future of the retail sector in the long term?
E-commerce is the future and the reason why many businesses have been able to stay in business and afloat during the pandemic. I believe that in the long term there will continue to be a combination of face-to-face and online shopping, known as omnichannel commerce, which will be a cornerstone of the retail sector in the future.
Green hydrogen is another of the developments that we highlighted in our list of 10 Emerging Technologies of 2021 for its potential to replace fossil fuels. How do you at Iconn – and especially at Petro Seven – foresee the future for this innovation?
We are exploring the future of this market. Our current government is still very much focused on refining, so, at Iconn, we have to adapt to these possibilities. Although researching green hydrogen and other sustainable fuels is on our roadmap, in the short term, the most likely is to enable electric vehicle charging stations at our petrol stations, thereby supporting the transition of these energy sources in the automotive industry.
Published by OPINNO © 2022 MIT TECHNOLOGY REVIEW spanish edition
