Wednesday, November 27, 2013

A Makro Reinvention

In 1995, one of the largest grocery store chains in Colombia started operating.  Makro’s first five years were a complete hit.  Their strategy of intimidating competition by occupying physically large areas, plus their numerous invite-only events, changed the face of the retail segment in Colombia.

Years later, things started to tighten up.  First, an external competitor, the French chain Carrefour, entered the market creating a threat; and eventually a group of smaller stores joined forces to create yet another big competitor.  In those consecutive years, Makro tried more than one strategy to try to salvage their golden years.

They found the right formula in 2006, and it was as simple as going for specialty products.  While competitors were at each other’s throats with price wars and opening as many branches as possible, Makro became the primary provider for stores, hotels, restaurants, and caterers, to name a few.

This decision not only yielded a 15%+ annual growth between 2006 and 2010, but it caused a stir in their value in 2009 when the Dutch group SHV bought 50% of their stocks.  Since then, Makro took the commitment of adopting a process of continuous improvement to make sure their business model stays up to date current trends.  Their clients started sharing their more than 10,500 contacts in their own client portfolios and they opened three more branches in different cities.

Only two strategies allowed them to close fiscal year 2010 with sales of more than $735,000,000.  They are now looking to outdo themselves with their brand’s re-launch by renovating their stores and opening 10 additional points of sale.  This strategy involves selling their own store brands, which constitute 14% of their sales, which is why their mantra is “quality over price.”

Their story shows the power of reinventing a strategy and knowing when to abandon a red ocean to go seek for “bluer” waters.  Makro’s re-launch and reinvention was a $100,000,000+ investment which definitely paid off.  Not every company changes their strategy to stay competitive and successful, but how do they do it? It makes sense to decide to constantly change given that consumers and marketing styles change with time, so how do you stay afloat if you keep sailing with the same vessel throughout the years?


By Elisa Taymes

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