Photo: The CIO of La Comer, Flor Argumedo. Credit: MIT Technology Review (ES)
By Alba Casilda
When coronavirus (COVID-19) first began to spread internationally, it seemed as if the world was going to stop. But this was not the case. Responsibility fell on certain sectors to keep things going. Among them was the food and commerce industry. The CIO of the La Comer group, Flor Argumedo, recalls: “We had a societal obligation: we couldn't give off the impression that there could be a shortage of resources. If customers were to come to the shops and see the shelves empty, it could create psychological chaos.”
In order to stay in business, the Mexican supermarket chain relied heavily on technology and upgraded its systems so as to meet new demands. However, as Argumedo recalls, this is not the first time the company has renovated itself. In 2016, it launched its new concept for shops aimed at a market with high purchasing power and explains that, in any event, “the focus must be on quality: of products, sales channels and work culture”.
How has the La Comer group tackled the COVID-19 pandemic in terms of securing essential commodities? What role has technology played in this?
Companies that lacked a solid technological foundation may not have been able to cope with the accelerated demand that the pandemic produced. A good technological system is not created overnight. For us, a number of factors have played a key role in achieving this.
One has been to have a good procurement and supply network, which is supported by algorithms to ensure that there is no shortage of essential products. Another has been in relation to in-store operations. We were receiving up to three truckloads of food a day, but if the shops hadn't pulled out all the stops, it wouldn’t have mattered how much stock they had, it wouldn’t have been possible.
Logistics also played a vital role. We opened alternative distribution centres and hired an additional 1,000 people to handle deliveries. This helped us to become the only chain in Mexico to deliver 100% of orders on the same day they were placed.
“The pandemic increased our ‘online’ demand by 700 %”
Finally, another essential aspect was e-commerce, as our online demand grew by 700%. The infrastructural side had to be totally linked with the technological side to support all of this. Servers, caches, WebLogics… everything had to work together so that the site would never go down. Achieving all of this manually would have been impossible.
How are you managing to satisfy customer's new demands?
We decided to launch some new initiatives, and the pandemic has accelerated some of the projects we have been working on by five years. For the last 20 years, we have been using algorithms to predict demand, and one of the projects we had been considering involved incorporating artificial intelligence into these algorithms.
In the past, we used historical data to forecast consumer demand, but all of a sudden, customers started to change their habits and were not behaving as they did last year or even five years ago. We had to create a new model that could learn from the new customer experience. Thanks to machine learning, we have been able to incorporate new variations in merchandise faster. By June we were already running pilot programmes in shops and this has been the key to ensuring that the replenishment of merchandise is in line with current demand.
Online sales have generally increased across all sectors, so what will happen after the peak in sales has passed?
The big challenge is in retaining the pandemic's new online customers. Our percentage of e-commerce sales went from 2% to 10%. It is clear that we are attracting customers coming from other self-service businesses. In order to keep them, we must offer them value and quality in app usage, operations and delivery. To do this, during these pandemic months, we have been updating the backoffice of our website and app every month.
“After the pandemic, the challenge is in retaining new ‘online’ customers”
In order to provide customers with quality you have to get to know them, how are you measuring their experience?
We manage various automatic KPIs, such as response time, user experience satisfaction, how the goods were delivered and whether they arrived in the time requested by the customer. We also conduct surveys to listen to customer feedback. At La Comer, we are in a permanent beta state. Our innovation is not only based on a budget, but also on the skills and aptitudes of the employees to always think about how to offer a better service. It's equally true, there are many projects in the pipeline, but it' s not always a question of money or people, but of adapting to what the customer likes.
One of the most popular new innovations used by customers are new digital payment methods, how do you incorporate these into your business?
This is another trend that has been accelerated by COVID-19. Prior to the pandemic, we decided to launch a project to accept all the payment methods that are available in Mexico. For example, in addition to allowing wallets generated by banks, we also accept CoDi. It's a government-led scheme that allows payments to be made through a QR code and to bring banking services to those segments of the country's population that don't have access to a bank account.
Little by little it is gaining ground and people are liking it. Customers don't pay any fees and neither do we. Obviously, the banks don't like it because there is no profit for them with CoDi. We believe that the market is heading towards a digital transformation and we will see it most quickly in the new forms of payment.
In the retail world, innovations related to virtual and augmented reality are also being incorporated, do you think they could be applied to supermarkets?
These technologies can add a lot to the shopping experience. For example, your mobile phone can give you valuable information to select products or shop more quickly. You can tell it that you want to buy mayonnaise and it will show you the best place to get it and recommend the best mayonnaise, depending on what you are going to use it for.
“If you know a different world is coming and you don't change, you will fail..”
I think that customers will enjoy the experience of feeling that they are making a smart purchase. Despite there being a vaccine, the world has changed and anyone or any company that doesn't see that is going to end up floundering. If you know a different world is coming and you don't change, you will fail.
In today's new world, with giants such as Amazon increasingly dominating the market, how is your company preparing to face this type of competitor?
These companies are channels that are here to stay, and they are doing very well. But this doesn't mean that we cannot reinvent ourselves. Once you see that e-commerce works, it would be silly for anyone not to want to sell digitally. We must work to ensure that the experience that customers enjoy in the physical shop, can also be enjoyed online. La Comer's shops invite people to buy and we want that to happen with e-commerce aswell. To achieve this, we developed hyper-personalisation algorithms.
Nevertheless, we don't think that physical shops are going to disappear. Both experiences will survive, and we will learn how to make them better. In fact, Amazon itself is opening shops with Amazon Go. They are very high-tech, but they are also physical.
Published by OPINNO © 2022 MIT TECHNOLOGY REVIEW spanish edition