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The Secret to Successful Retail: Play to Your Strengths

May 11, 2015 by John Ward 0

Mexico is a land of contrasts. This fact is perhaps no more evident than in the country’s retail sector.

As a PwC report so aptly describes the situation, “Mexico is a hybrid country, where new, world-class retail development shares the street with an estimated 2.3 million mom-and-pop stores and traditional markets; all these venues serve a highly diversified and continuously growing base of consumers.”

Finding a competitive edge in this environment is undoubtedly tough. But it’s always a good idea to play to your strengths.

And for some of Mexico’s larger retailers, apparently this means making the most of technology – whether it’s installing better in-store lighting or using analytics to gain deeper insight into what customers want.

An Environmentally Friendly Shopping Environment

This is exactly what is happening at Grupo Merza – a retail and wholesale leader that specializes in high-quality groceries, beverages, and pharmaceuticals. Grupo Merza operates 152 retail stores and 19 wholesale distribution centers across 30 Mexican states. Its well-known brands include Merza, Mega Merza, Abarrotes Lagunitas, Cava del Duero, and Super Covi.

“For us, one of our crucial goals is to be close to our customers by offering the best service, most environmentally friendly shopping environment, and lowest costs,” says Guillermo Valdes Vega, CEO of Grupo Merza.

His statement was part of a news release last September announcing plans to upgrade Grupo Merza stores and distribution centers with new, energy-efficient LED lighting solutions. The retrofit is expected to generate significant energy and cost savings while reducing greenhouse gas emissions.

Shedding New Light on Consumer Buying Habits

Grupo Merza is also using the latest in analytics technology to gain a deeper understanding of its retail and wholesale customers. This includes SAP Lumira software for data access and the SAP HANA platform for real-time analysis.

In a specific example, Grupo Merza is tapping into point-of-sale data with the SAP Sales Insights for Retail analytic application powered by SAP HANA to analyze market basket compositions, compute product affinities, and identify drag-along items during promotional sales.

One of the goals is to deliver a more convenient shopping experience for consumers with improved product placement in stores and competitive pricing.

“With analytics tools, Grupo Merza is becoming a data-driven organization,” says Grupo Merza’s CIO Alfonso Cedillo in a recent SAP Business Transformation Study. “With better data access and deeper point-of-sale insight, we can see who our customers are and what they want.”

Modern analytics also support Grupo Merza’s wholesale operations. Data analysis helps the company offer bulk buying promotions, while predictive analytics improve risk assessment when offering credit lines to wholesale buyers.

All of this is quite an improvement over the past when sales analysis was often restricted to store location or product category and Grupo Merza relied on spreadsheets to track and share such data.

Retail of all Sizes is Big Business

Many analysts see a bright future for big retail in Mexico.

But even as modern retail grows, all those mom-and-pop stores continue to play a significant role in the daily lives of millions of Mexicans. After all, the country’s tradition of outdoor marketplaces and streets vendors is centuries old.

McKinsey & Company points out that retail is one of the biggest sectors in the Mexican economy – accounting for 7% of the nation’s GDP and employing 10% of the labor force. The consulting firm contends that raising productivity in both modern and traditional retail is very important to driving Mexico’s economic growth.

And for companies large and small, the key to success just might be the ability to identify and capitalize on what you can do best.

Gracias por su atención y hasta la próxima, felices compras!

Join me on Twitter at @JohnGWard3.

Learn more about SAP Lumira, SAP Sales Insights for Retail, or SAP Predictive Analytics solutions.

This story originally appeared on SAP Business Trends.

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