(A success story which started with a visit by the director of Grupo Gigante's human resources at Southwestern College, then to the SBD-ITC and Customized Training at the college.)
12-Nov-1995 Sunday
MEXICO CITY -- Desperate to win the loyalty of an increasingly
frugal
middle class, managers at a Gigante supermarket here
last summer came up
with an idea startling for a culture notoriously
indifferent to customer
service: they installed a shopper hotline.
Customers at the Gigante in the San Antonio district --
the 33-year-old
chain's oldest store -- can speak immediately with someone in
charge. They
simply pick up any of five special telephones throughout the
store to page
a supervisor. Whoever is on duty, Gigante
officials say, will drop
everything to respond.
From Baja California
to the Yucatan peninsula, such innovations have become
the rule for large
Mexican retail chains. Beset by steep recession and
unprecedented competition
from U.S. superstores in a market thrown open by
the North American Free
Trade Agreement (NAFTA), merchants can no longer
afford to obey ironclad
company rules at the expense of individual customer
whims and needs.
In an economy still grappling with a currency crisis, every peso counts.
Industry analysts estimate 1995 sales for major retailers are down by
as
much as 30 percent from the year before. Stores such as
Gigante, stocked
with everything from portable stereos to
fresh fish and chili peppers, have
been forced to offer drastic discounts on
basic merchandise.
"All the players are doing badly," said Christine
Aimar of ING Baring, a
brokerage house in Mexico City. "Since the beginning
of the year, retailers
have adopted very defensive strategies. I think
they're going through their
worst times ever."
Gigante, whose name means "gigantic" in Spanish,
appears particularly
vulnerable.
While public disclosure of earnings
and sales is scarce in Mexico, analysts
rank the chain third behind the
retailers CIFRA -- headlined by the store
Aurrera -- and Comercial Mexicana.
Analysts say Gigante trails even though
it boasts 189
outlets -- more than either of the two major competitors.
Another challenge
has arisen in recent years as CIFRA and Comercial
Mexicana entered into joint
ventures with U.S. powerhouses Wal-Mart and
Price Club.
"Gigante is considered to have a relatively tired
format," said Tim Baker,
an analyst for the Bursamex brokerage house in
Mexico City. "There's
certainly a lot of room for improvement."
Yet
Gigante officials say they have profited from adversity. In
unusually
blunt admissions, they claim to be more open to change than ever.
Their
apostle is a San Diego-area business consultant named Wayne Lundberg.
Lundberg, who started last year with a pilot course for
Gigante's 24 Baja
California store managers, now flies every
two weeks to Mexico City to
preach his gospel at company headquarters.
His message: Be like Wal-Mart. Take off your necktie and serve
customers.
Bend rules. If necessary, ignore your boss.
While no
longer novel among U.S. businesses, this sounds revolutionary in
Mexico.
"My task is to try to make entrepreneurs out of each one of their
store
managers." Lundberg said. "What with NAFTA, they realized they had to
do
something. They had to at least learn how the competition thought.
"Before, the store manager was an administrator, buried in paperwork,
with
pretty much zero communication with customers. If a customer
complained
about something, if a customer asked a question about something,
that was a
bother. Now that's changing."
The results can be seen in
the Gigante stores in Tijuana, Mexicali,
Ensenada and
Tecate. In a year of overall sales decline, company officials
say the Baja
division has performed strongly. It has, they say, shown net
growth in sales.
Of course, a large part of that success is due to the peculiar economics
of
the border and the devalued peso.
Mexican customers who once might
have crossed over to shop in the United
States -- what store officials call
"leakage" -- now are staying home,
while more U.S. customers are crossing
over in search of bargains. Gigante
says the new
customer-service ethic in Baja has enabled it to capitalize on
the
devaluation.
"The store managers are more self-sufficient, and that has
let us be more
responsive to the clients," said Raul Rios, manager of a store
in Tijuana's
Rio district. "There isn't as much bureaucracy."
For
Rios, change is as simple as posting managers -- including himself --
near
the front door every day to greet customers and quiz them about the
layout of
the store, product selection, even the background music.
"Normally in
Mexico, it's the culture that the boss is the owner of the
business," he said
"For us, it's the reverse. It's very clear that our boss
is the client."
Nearly 1,800 miles to the southeast, Jose Saldana sings the same tune.
The assistant manager in what was Gigante's first store
in Mexico City says
there are at least five customers a day who use the
hotline. He says he is
most interested in complaints about poor service.
"I see a lot of change," said Saldana, 35, who has been with
Gigante 15
years. "What I have noticed is there is so much
competition. Sales are
tougher. Clients are more demanding. They want better
prices, and they want
more service and attention."
Customers
interviewed outside Saldana's, store said they were impressed.
But it is
still unclear how Gigante and other Mexican retailers will
fare
over the long term.
When the economic crisis eases, stores such
as the huge Mexico City
Wal-Mart, which has been hurt this year by the high
price of imported
goods, could boom. As a buffer against Wal-Mart and Price
Club, Gigante
recently entered into a joint venture with the
French retailer Carrefour.
For the average Mexican, the industry
shakeout is good news.
"The consumer is getting a better deal in
Mexico," said Robert Ford, an
analyst with Merrill Lynch in New York City.
"Retailers are trying to trim
costs, remodel, broaden (product) categories
and strengthen categories."