Makro in 2019
As a result of a strategy revision and following overall market trends in its various countries, Makro started the transformation process from a traditional food wholesaler serving mainly small food retailers and HORECA customers to a modernised food cash-and-carry concept targeting professional food customers as well as end-consumers. With this new concept, Makro differentiates itself from competition with a well-known own brand assortment and a fresh food offering. With an innovative HORECA food service concept for the São Paulo market, Makro is developing additional channels based on service excellence in high density markets.
Makro is present in Brazil, Argentina, Colombia, Peru and Venezuela and operates a total of 165 stores.
Most markets in which Makro is active experienced volatile economic and political circumstances. This impacted business substantially. In addition to the challenging market environment, overall competition in the cash-and-carry market is increasing and was particularly strong in Brazil.
Because of the ongoing challenging market environment in Brazil, a process was started to review the options to ensure future profitable growth. This resulted in the decision to sell or rent-out the Makro stores that are located outside of the State of São Paulo. The process will be executed and finalised in 2020 and is part of a restructuring to allow for focusing on the new strategic direction towards the new food cash-and-carry concept in combination with Makro food service. This will be implemented in the stores located in the State of São Paulo, based on the succesfull experience in that market.
Argentina continued to experience hyperinflation. A newly elected government did not lead to a decrease in political uncertainty and further reduced consumer confidence and spending. Operating in a hyperinflationary environment with stronger government controls was challenging and the focus has been on steering the profitability of the stores in these demanding circumstances. To increase customer experience, the fresh food assortment was refined and the check-out process improved. A new store was opened in Salta.
The Colombian economy showed modest growth, with increasing consumption within a relatively stable social political environment. Makro continued to focus on expanding its leading position in the cash-and-carry market that is becoming more and more competitive. In particular, hard discount formulas are strongly increasing their direct competition, mainly targeting end-consumers. A new store was opened in Valledupar.
In Peru, the leading economic indicators were positive, driven by higher employment and investments. Competition is increasing rapidly and the focus was on retaining the market leader position. This was supported by a positive development of the Net Promoter Score, as payment methods and customer service were improved and the check-out time was reduced. Two new stores were opened, in Huacho and Trajillo.
Venezuela remains trapped in an extreme hyperinflationary environment, with ongoing social and political turmoil. Governmental controls are strong and product availability is very low. Makro continues to operate in survival mode, doing well operationally considering the circumstances. The main priority is to keep the employees and customers safe.
Building Makro´s future through innovation is important in staying ahead of competition. The new food cash-and-carry concept, including food services, provides the platform on which to build. An innovative 'milk run' project, that delivers a limited assortment to small restaurants and kiosks, started in Rio de Janeiro in 2017 and the next phase is being tested in Lima. Another innovation is focused on using data analytics to enhance individual customer offerings, thus enabling better customer support. Over 4,000 employees were trained to understand, test and implement new in-store solutions.