SMEs in the retail sector are optimistic towards 2021

GS1 Mexico and the market research agency Psyma Latina presented the 3rd Edition of the GS1 Barometer 2020 - SME Manufacturers of the Consumer Industry.

Like every edition, this one had the participation of 500 companies; 74% small, 14% medium and 12% large manufacturers who expressed their perception of their activity within the retail sector in 2019 and 2020, as well as their vision of the future, needs and concerns to consolidate and develop their business.

The study shows that the Manufacturers of the Consumer Industry considered 2019 a good year, but not an excellent one, so that expectations were set for 2020. However, as this goal was not reached due to the pandemic, companies were resilient, optimistic and innovative, trusting that, although the situation will not improve considerably by 2021, it will be able to stabilize ”.

The study interviewed owners (43%), managers (18%), and CEOs (12%). 66% of the companies reported an increase in their sales in 2019, while 11% remained the same, 14% consider that the losses were minimal and only 9% reported a strong decrease in their sales.

61% of the organizations declared an increase in customers in 2019, while 23% highlighted that they had no changes or variations, 12% reported a slight decrease and 4% highlighted a strong reduction, which places them in an evident scenario of crisis.

It should be noted that medium-sized companies grew in sales by 12% during 2019. In addition, the food and beverages category is the one with the smallest decrease in sales (19%), followed by basic goods (25%).

2020 the year that changed life

The data show that a greater number of Mexican businessmen have been negatively affected by the health contingency. Different factors can be attributed, but, in summary, this phenomenon arises from the lack of anticipation before the reality that is being lived, says the study.

However, the companies that did obtain a certain benefit, allow us to see an encouraging future by adopting models according to the challenges of the new era.

In 62% of the cases the COVID-19 pandemic negatively impacted their operation, while 25% suffered a positive impact and 13% had no repercussions.

By company size, 66% of small and medium-sized companies reported a negative impact, respectively, while only 37% of large ones did.

^{GS1 Mexico}

Regarding the perception of the current situation in 2020 sales and the impact of the health contingency, 75% of the organizations reported a decrease in their sales, 5% mentioned that they remained stable and 20% reported an increase.

Regarding the number of clients in 2020, 58% of the companies mentioned a decrease, 24% answered that it remained the same and 18% highlighted an increase in their client portfolio.

By company size, 59% of small companies, 58% of medium and 44% of large companies reported a decrease in their number of clients.

The health contingency due to COVID-19 negatively affected companies in the following areas:

• Manufacturing or manufacturing of products - 58%
• Logistics and Operation Processes - 55%
• Customer relations - 48%
• Relationship with suppliers - 45%

Business success factors 2019 and 2020

• Logistics and distribution
• Relationship with the commercial chain
• Packaging (design) - attractive packaging

Success Factors that dominated companies 2019  

• Optimal raw material for the product
• List / fixed prices - product prices
• Finished product without defects
• Packaging (design) - attractive packaging

Success Factors That Dominate Companies 2020  

• Optimal raw material for the product
• List / fixed prices - product prices
• Finished product without defects
• Packaging (design) - attractive packaging
• Variety of presentations

Success Factors that companies can improve 2019

• Logistics and distribution
• Relationship with the commercial chain
• Quality certificates (eg ISO)
• Variety of presentations
• Prices with discounts / promotions - discounts and promotions plan

Success Factors that companies can improve 2020

• Logistics and distribution
• Relationship with the commercial chain
• Quality certificates (eg ISO)
• Product innovation / technology

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Internet as a tool

The use of internet-based business schemes continues to grow naturally, but “ without a doubt, the health contingency due to COVID-19 has marked a before and after in businesses around the world, by becoming the main disruptor of digital transformation in companies, as well as an accelerator of e-commerce, digital marketing, product delivery and merchandise replenishment strategies. Omnichannel is here to stay, ”said Simeon Pickers, CEO of Psyma Latina.

On the issue of the Internet as a Business Tool, it was mainly out of necessity as a result of the pandemic and not because of a growth plan, the study highlighted.

In this context, four out of 10 companies (38%) do not have a corporate website, however, 45% of the organizations consulted make sales online through various marketplaces. Of this percentage, companies use Amazon (60%) and Mercado Libre (57%) due to their friendly interface with smartphones and other devices, in addition to being the most used. Other ecommerce platforms that companies use are: 7% Shopify, 6% Linio, 4% Second Hand, 1% eBay and 26% others.

Companies are venturing into online sales even without considering themselves with the necessary knowledge, which could lead to bad experiences and leave these types of transactions in the future.

Faced with this scenario, training is key to professionalize e-commerce strategies, as well as having the advice of experts to put your products on the digital shelf with a clear strategy of prices, promotions, shipments and returns.

On the subject of social networks, companies use them to communicate, position and market their products, the most used being:

• 7 out of 10 companies use Facebook - 73%
• 1 in 2 companies use Instagram - 48%
• 2 out of 5 companies use Twitter - 21%.

Among the reasons why 33% of organizations do not make online sales are:

• 44% ignorance within the company about the e-commerce model.
• 33% lack of investment in technology.
• 33% difficulty implementing a new business model.
• 17% concerns about security and fraud prevention.
• 21% others.

Human capital

Employees and collaborators continue to make a difference in organizations as generators of innovation and creativity, so developing their soft skills and training them to master their work will allow them to face crises and contingencies that may arise in the future.

Towards 2021

“It is clear that we live in a context of constant changes and disruptions in economic, social and health matters, so integrating the elements of flexibility, resilience, solidarity and innovation into business strategies will allow us to face the challenges of the near future of the best way, ”says the Barometer.

54% of the companies surveyed foresee that 2021 will be a better year, 41% believe that it will remain stable and 5% think that the situation will get worse.

Although the challenges are more challenging, advances in technology and the will of the Manufacturers Sector in Mexico continue to be key elements in projecting a 2021 of positive changes. Companies stand out for being resilient, innovative and positive for the future.

You can download the complete study of the 3rd Edition of the GS1 Barometer 2020 - SME Manufacturers of the Consumer Industry at this link .

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