As a result of a strategy revision, and in line with overall market trends, Makro initiated a transformation process in 2020. This involved a shift from traditional food wholesale serving mainly small food retailers and Horeca customers, to modern food cash-and-carry targeting professional food customers as well as end-consumers. The move aims to significantly increase Makro’s customer base, while providing a better shopping experience.
Makro is also developing additional channels—mostly in e-commerce—to provide service excellence in high density markets. The goal is to provide a range of options and allow customers to choose how they purchase and receive their products.
Following the strategic review, the sale of the majority of the Makro stores outside the State of São Paulo has been concluded, with great care taken to ensure the well-being of those colleagues who left.
Subsequently, in November, SHV was approached for the sale of Makro Peru by InRetail, the country’s largest retailer. After careful deliberation it was decided to accept the offer as it is the firm belief that Makro Peru and its employees would become part of an organisation that enables them to grow and prosper in the future.
As of the beginning of 2021, Makro operates a total of 107 stores in Brazil, Argentina, Colombia and Venezuela.
The COVID-19 pandemic has driven a significant decline in economic activity across all these markets. Governmental restrictions deeply affected the spending power of every customer group, in particular the Horeca sector. The combination of closures, limited opening hours, and mobility restrictions affected all business units, especially those in Argentina and Colombia. At the same time, the impact was partially offset by an increase in purchases from end-consumers, as well as sales generated by new commercial initiatives.
From the very start of the pandemic, stores made the health and safety of both employees and customers their main priority. Best practices, learnings, and new sales initiatives were shared across markets to adapt and improve store operation as effectively as possible. Investments were put on hold as the focus shifted towards achieving further cost reductions without compromising safety and compliance.
Faced with this unique set of challenges, the Food Cash & Carry strategy could not be implemented as planned. Even so, the omnichannel proposition was accelerated throughout the region and new opportunities to expand customer sales channels continued. As the pandemic accelerated the use of alternative e-commerce channels, Makro became one of the first companies in the region to partner with specialised digital platforms - and aims to expand the initiative in the future.
In Argentina, political instability continued and the economic recession deepened, raising unemployment and negatively impacting general consumption. At the same time, the government declared a price freeze by setting maximum sales prices that affected 20% of the Makro product range. This all had a negative effect on results. In spite of such challenging circumstances, Makro opened a new store in Benavidez, taking the total number in the country to 23.
In Brazil, the pandemic caused a sharp contraction of GDP and private consumption. A lighter quarantine and the early easing of restrictions, however, together with government stimulus initiatives and cuts in interest rates, produced clear signs of recovery in the food retail sector. Outside São Paulo, 44 stores were closed, following the strategic restructuring process.
In Colombia, Makro saw the toughest government measures, with the economy contracting sharply as curfews and mobility restrictions were placed upon several cities. Unemployment rates reached alarming levels and performance was heavily impacted by the pandemic. Even so, in November a new Makro Urban Store was opened in Barranquilla. As the pilot for a new small store format with a Food Cash & Carry approach, it is aimed at areas with a high concentration of end-consumers.
In Peru, economic indicators have been hit hard by restrictive measures triggered by COVID-19. A political crisis has also increased uncertainty and instability. Despite all this, Makro Peru showed a relatively good performance driven by the fast progress and execution of strategic initiatives. As we have seen, the decision was taken to sell Makro Peru in November with the deal finalised before the end of the year.
Venezuela continued to struggle with the extremely challenging scenario of hyperinflation, political turmoil and social unrest all worsened by the onset of the COVID-19 pandemic. The country has also been facing a significant gasoline shortage that has prevented customers from visiting stores. Makro Venezuela continues to operate in survival mode with the main priority being to protect employees and customers.
Makro is leveraging innovation to create value by accelerating the Food Cash & Carry strategy and, at the same time, increasing customer focus.
With various e-commerce initiatives tested in all markets, an open innovation program piloting three start-ups was also rolled out in Brazil. The Makro Vantagens loyalty scheme was successfully introduced in Brazil and is now being prepared for launch in every market.
All Makro business units continued working to reduce greenhouse gas emissions, water consumption, and waste generation by making improvements to infrastructure and building partnerships with suppliers.
Social responsibility, always important, came to the fore during the COVID-19 pandemic. All countries played their part in supporting initiatives to help vulnerable local communities. Existing social-educational programs were continued, although these had to be adapted to reflect rules on social distancing.
For Makro, the Health and Safety (H&S) of all people represents a key value and Makro aims to create a better workplace for all. A four-year plan brings together compliance with regulations and internal standards, implementation of the correct H&S tools and standards, and improvements in awareness. One key goal is the complete elimination of both incidents involving people and occupational disease .
Makro has continued driving strong corporate values and compliance with policies and laws. Over the course of the year, a range of dedicated Ethics & Compliance activities included workshops and training sessions on subjects such as sexual harassment, respect, and conflicts of interest.
A Code of Ethical Conduct and Privacy was also launched in 2020. Every business unit approved the data breach policy and ensured they remained in full compliance with local data protection, competition, and privacy protection regulations. In addition, an E&C Week held in all markets featured digital activities, team conferences, and daily communications highlighting a range of relevant topics.
The commitment to Diversity & Inclusion also remains strong. As part of the Taking the Stage program, female colleagues were given tools to improve communication assertiveness. In line with these efforts, all business units were given support to promote a more inclusive recruitment process and bias awareness.
The effect of COVID-19 restrictions, such as store and restaurant closures and lockdowns, and government imposed closures of Makro stores, was mainly felt in Argentina and Colombia. This was partly offset by increased sales from end-customers as well as from alternative channels such as e-commerce. The improved performance of Makro stores in São Paulo, Brazil, the sale of Makro stores in the rest of that country, and the divestment of Makro Peru as a whole also made significant contributions to net results.
Sale of Makro Peru
Acceleration of omni-channel proposition
Support for vulnerable communities