Two years ago, the Walmart supermarket chain closed an agreement with its British counterpart Sainsbury's to merge both operations in the United Kingdom. The operation, valued at 15,000 million euros, created the largest supermarket group in that nation with a 35% share and more than 2,800 branches.
But it was not a mere transaction between two of the main British retail players seeking to join forces to compete with the rest of the players in that business.
It was a reaction to the advance of Amazon and with the objective set to dispute in better conditions and with new strategies the virtual format of mass consumption represented by those giants of global electronic commerce that have been gaining ground in an accelerated manner.
A look that Walmart expanded to the rest of the world for the powerful reason that the globalization of commerce and the emergence of those large companies selling consumer goods without the physical presence of buyers turned into a global battle.
And although in Argentina Amazon has not yet landed with its marketplace, Walmart wants to take advantage of knowing the market to rearm its business profile and shore it up much more on the online channel.
The online channel is a focus on which the US holding company wants to base itself to grow and transform its model of large stores, which reached its ceiling and, consequently, there are no more chances of propping up with the opening of branches. But the chain's executives know that to achieve this, a strong injection of funds is needed to improve their performance on the web.
For this reason, in the last hours it was known that its headquarters went out to look for a strategic partner to compete against the referents of virtual commerce and, at the same time, position itself as the leader of this fight.
A dispute that, in addition to Amazon, at the local level is also beginning to give Mercado Libre with SuperMercado Libre, a new section of food, personal hygiene and home cleaning products that the company has just launched in Argentina after having installed it in Mexico and it is preparing to replicate in the rest of the region.
In this framework, Walmart does not think about going out of business or fully selling its local operation, but rather finding anabolics to accelerate growth in the online channel. In this framework, he gave Citibank a mandate to go out and offer this project to local and foreign stakeholders who want to close an association in the country.
But the emergence of the coronavirus pandemic and its negative effects on almost the entire local economy and also on the mass consumption business froze this process. In any case, the proposal managed to attract a long list of interested parties that also includes businessman Eduardo Eurkenian and eight other international groups. Along the way were Coto, the Inverlat fund (owner of Havanna) and the De Narváez group, who failed to convince Citibank.
"As of today, this process is on hold due to the need to focus on management in the framework of the emergency situation by COVID-19," says Juan Pablo Quiroga, manager of Institutional Relations at Walmart Argentina.
In order to clarify the limits of the operation, the executive notes that the group continues to trust in the potential of the local business, which indicates that the model sought by the chain in the country is still in an exploratory stage that remained in the freezer by coronavirus.
Once the situation returns to normal, it will be analyzed whether the search for that strategic financial partner is reactivated. It will be necessary to analyze the damage that the fight against the pandemic will leave in the retail sector and to know if there are still interested in investing in an economy in crisis and with a deep recession.
In the market they understand that the post-pandemic scenario will have to be evaluated also in Walmart's own business, for now complicated with a 25% drop in its sales volume despite being one of the activities considered essential and with activities beyond compulsory sanitary stocks.
The only certainty is that, with or without a partner, the next step for the chain in the country is to increase the weight of the online channel in its consolidated total.
This is foreseen in its global strategy. Janey Whiteside, Walmart's customer manager, is blunt about it: "We know that when we get out of this, customers will be busier than ever, and sometimes that will require urgent supplies. The COVID-19 has prompted us to launch Express Delivery even faster. "
The system, which has already had its pilot test in the US, is based on using the figure of the personal shopper: an employee of the chain who receives the orders that the customer makes in the app or the web. This model could also be used in Argentina, where Rappi has already implemented it with its own personnel at Carrefour, Jumbo and Coto.
"They are employees hired by Rappi and identified with an orange apron and cap, which we train weekly. They are in charge of checking with the client if the avocados are to eat now or in 20 days, if there is stock of the required deodorant, etc.," he told iProUP. Matías Casoy, country manager of the delivery app, to explain this new function.
The online strategy, in addition, requires an additional boost based on the strong demand for e-commerce after the restrictions imposed by the Government on the physical presence of customers in branches of supermarkets and the existing limitations in some provinces or municipalities for the marketing of a series of food products.
In the case of Walmart, until before the coronavirus appeared, electronic commerce had an almost insignificant weight of 3% of its total volume. "Now, it was boosted, to the point of representing up to 10% in just two months, with peaks of 40% in some of its branches," industry sources estimate to iProUP.
Such an increase found the chain misplaced to meet the increased demand from online customers, more than anything because its distribution and logistics structure is weak compared to that of competitors such as Carrefour and Coto, among others.
So, making the leap towards ecommerce forces her to have millionaire investments that her parent company seems not to be willing to risk alone in an unstable and high-risk country, both economically and from regulations.
Funds that must also be destined to the reconversion of its stores. Especially, those of large surfaces that operate under the hypermarket model, a structure that today is considered expensive, heavy and far from the needs of the demand.
Currently, the chain has 92 stores: of which 29 operate under the Walmart brand, 61 are Changomas and 2 are wholesalers with the name of Wholesale Point.
In 2018, Walmart had to reduce part of its structure, affected by the recession in the economy, the fall in consumption and the purchasing power of workers, with the closure of the hypermarket that operated in the DOT Baires shopping center and the sale of a dozen of local to Day.
A cut designed to respond to the crisis that the sector was suffering at that time and that also affected other players, such as Carrefour who chose to ask for the government's help to reduce its structure with the implementation of a crisis prevention procedure. He also changed his local CEO to a French-born executive who came with an order to reorganize the business.
Both chains were hit by the macro context, the successive devaluations and the financial instability of Argentina, to the point that they received funds from their headquarters to support operations in the country.
Now, the quarantine has also been hitting them and leads them to observe how customers, many surely by obligation, get used to virtual purchases, to the choice of the product basket remotely and to payment by electronic means, without going through a box or wander the gondolas.
"The percentage of participation in home delivery, above other delivery modalities such as pick-up at the store or pickup, reached 40%", sources calculate the sector in dialogue with iProUP.
But during the first weeks of quarantine, the chains registered serious problems in their digital operations, since the fall of their web platforms, delays in delivery periods due to lack of stock.
At Walmart the weak flank passes through the distribution system. A problem that does not affect Coto or Carrefour, which have been demonstrating faster delivery of orders, although they have also shown failure to meet consumer demands. In the case of Coto, its website fell almost constantly due to a lack of investments in its support. At Carrefour, meanwhile, the criticism of its clients refers to the lack of supply.
At Walmart, the concern is logistics, to the point that they had to close urgent agreements with players in this sector such as Andreani, OrdersYa, Rappi and Glovo.
In the area of the Federal Capital and other regions, they doubled the number of vehicles affected by delivery services and opened two new offstore points to ensure distribution outside the store.
In other markets, the chain has already managed to carry out similar operations, such as in Chile, where it acquired control of Cornershop, an e-commerce platform that allows for on-demand purchases in supermarkets, pharmacies and other specialized stores. The incorporation of this company allowed it to strengthen the delivery of orders in the "last mile" (name that receives the final step in the distribution chain of an online order) between 60 and 90 minutes.
In Argentina, the agreements with the "distributors" allowed it to partially mitigate the impact of the crisis thanks to taking better care of its online sales process with a view to continuous improvement that improves the customers' shopping experience and enables them to offer them a service. effective, safe and easy.
However, the digitization of its systems requires large amounts of investment that, until the Covid-19 pandemic changed the scenario of the local economy, it had been trying to achieve with the search for a strategic partner.
A look at the use of analytics and big data tools that enable you to offer your clients from digital platforms the opportunity to find products that they usually consume and receive them at their respective homes in a couple of hours or go to the nearest store for the order already stocked.