PRINATBLE VERSION HERE

INTRODUCTION: what is remarkable?

Covid-19 pandemic and the consequent lockdown strongly affected SM Group’s ability to operate both online and offline, due to the harsh regulations applied. This led the group into setting up a new way of selling and distributing its products, in a record time (deployment to 63 stores in 1 month), with significant & quantifiable results:

• Sales: average of 3,2K daily orders after lockdown (from scratch)
• Marketing: increase the reach by 31% while maintaining the CPC at an acceptable level

The “Call to Deliver” setup uses the existing instore resources (staff, assortment) to address the needs of the local clientele with a low-tech and simple procedure, while remaining in line with regulations and safety instructions.

Its success made SM Group identify a new channel opportunity, and this temporary solution has now become permanent, as it ideally addresses local communities’ needs & tightens ties between SM and those communities.

Benefits of the Call to Deliver setup

• Use of existing relationship with local customers to provide them with what they need, while reassuring about SM’s commitment and legal compliance
• From order processing to fulfilment, a low-tech setup, easy to implement, fast to deploy
• An internal cohesion tool: all teams were involved and contributed to find solutions
• Can be easily transposed to other IADS members setups

Key learnings

• In a crisis, grouping together to design a collective solution with clear accountability lines can be effective and quick
• The implication and cooperation of all teams from the beginning brings a pragmatic and down-to-earth implementation
• Low-tech and simplified procedures sometimes exceed more sophisticated operations
• By putting the customer experience at the centre a new retail channel was created and allowed to reach a new clientele

A harsh Covid-19 context

100 million Filipinos went into lockdown on 16th March 2020. Planned initially for a month, the lockdown ended up being one of the longest of the world, until June, and one of the harshest: total closure of the country and impossibility to travel, restriction on mass gatherings of more than 10 people, total closure of schools and “non-essential” businesses, “stay at home” orders and mandatory wearing of face mask outside, curfew from 8pm to 5am in Manila region (30% of the population, 27 million people), and other strict measures.

The release from lockdown end of June saw a rise in cases and led the Philippines to revert to a second lockdown early August, with a 24-hour notice to citizens and businesses. However, due to the impact on the economy and the lack of publicly funded social support, the lockdown measures were softened mid-August, sometimes creatively: at the time of writing, the Manila region is going through a rolling lockdown: one week open, one week closed.

As of 7th September, the Philippines is the first country most impacted in South East with close to 239.000 cases and 3.890 deaths, making it the 21St most impacted country in the world. Economically speaking, Q2 saw a GDP contraction of -16,5%, household consumption -15,5%, unemployment +17,7% and -6,4% revenue from the Filipino diaspora abroad. Overall, the country GDP is expected to contract by -7% and is now in recession, the first in 30 years.

IADS Member presentation: THE SM STORE

The retail arm of SM Investment Corporation is the largest and most diversified retail group in the Philippines: food (SM Market, Waltermart and Alfamart) and non-food (SM Stores and specialty stores). Its 2019 turnover was 6,3bn euros (+9% vs. LY), with a net income of 217m euros (+10% vs. LY).

Part of the SM Retail division, the IADS member, the SM STORE, has 64 stores nationwide, representing overall more than 807.000 sqm. of retail space, operated with 23,479 collaborators. Pre-crisis, SM has operated e-commerce since 2018:  ShopSM, linked to the group’s loyalty programs and including a click & collect concept (buy online, pick up instore).

Reasons for implementing a new distribution channel

The impact of lockdown was immediate: deemed as “non-essential”, all 64 stores had to close from 16th of March till 18th of May. E-commerce operations were also stalled, with staff having difficulties to reach the fulfilment centre, and logistical difficulties abound.

This is why SM Store developed a new retail channel, adjacent to the e-commerce operations: “Call to deliver”. Simply put, use the existing instore resources (staff, assortment) to address the needs of the local clientele with a low-tech and simple procedure, while remaining in line with regulations and safety instructions.

Call to deliver program – the beginnings

The idea

No hard selling was allowed to anyone: the law about “non-essential retail” had to be respected. To comply with regulations while trying to find a business solution, senior store management contacted customers, either via email or social media, to “test the water”: gather some news & give comforting messages. Templates were circulated to make sure key messages from SM Stores HQ were carried, with a latitude given in the tone, allowing managers to express themselves in a natural manner.

Quickly, customers came back with questions about purchasing goods & SM identified opportunities:

• Kids (cater for their needs and entertain them)
• Working from home adults
• Keeping healthy and in good shape (from home)

E-commerce being itself crippled by the lockdown, it seemed natural to use stores resources and stocks.

How to onboard teams

Philippines is a fragmented country. Therefore, in addition to the lockdown measures and teams’ sickness*, the potential impossibility to travel due to the lack of transportation added to the difficulties.

SM assessed the local context surrounding each store and categorized teams according to their mobility:

A. can come to store, will not have problems with checkpoints

B. can reach the store, but might be difficult

C. impossible to move

This allowed the identification of resources to further contact customers.

*SM Store took care of all sick employees by providing them full support & equipment when blocked at home, in addition to the state support on pay.

The stock issue

E-commerce stock was not reachable and had a more limited choice than the stores themselves. It was therefore decided to use the store’s stocks. However, stores were still closed to the public as “non-essential” businesses.

At the beginning, customers were simply on the phone with a sales rep, who was going along aisles of closed stores to pick what the customer needed. This quickly proved inefficient and troublesome for everyone. It was then decided to gather a selection of items according to themes: “work from home essentials”, “stay at home essentials”… allowing compliance with regulations while expanding the number of skus available (this implied creating from scratch ad hoc catalogues).

How to deliver in a cost-effective way

Customers had 2 options: home delivery (thanks to the employees still able to freely move) or curb side pickup. In both cases, for the sake of simplicity, products were delivered into regular SM shopping bags from the store, and not the sophisticated e-commerce boxes. Interestingly enough, this contributed to tighten the link between stores and customers, by giving to the latter memories of what life was pre-lockdown.

Detailed organization of the Call to deliver process

CTD is organized into 5 simple steps, with clear lines of accountability:

• Ordering station – 2 positions:

• ‘CTD Shopper’: Order taken via phone/social media after engaging the customer.
• ‘Order controller’: checks the coherence of the order and accuracy of picking

• Picking station – 1 position: goes directly instore to pick the selection
• Packing station – 2 positions:

• Cashier
• Packer – checks the order slip, sends receipt to the customer and advise when orders are ready.

• Dispatching station: 2 positions

• Runner: takes the selection from packing station to dispatcher
• Dispatcher: monitors and updates delivery

• Delivery / pick up station: 2 options

• Employee rider (collects or processes payment)
• Delivery partner (for locations the employee rider could not get into)

Operation deployment and marketing

The rollout was quick and effective:

• 13-16 April: pilot in 3 stores
• 17 April: extension to 9 additional stores
• 65% of the network ready within 0,5 month
• 95% of the network ready within 1 month, mid-May (just before the reopening of stores)

No specific marketing campaign was carried during lockdown, however, since early June, SM carries monthly promotions including rebates or free delivery when ordering via CTD, on thematic “essentials” catalogues (Mother’s day, Father’s day, Independence Day).

Quantitative results: future of Call to Deliver

Call to deliver generated 212 K transactions during the course of 10 weeks, with an average of 23 K transactions per week, including a peak of 36K orders just before the end of the lockdown.

During the week of reopening, this channel generated 18K orders, and went back to 25K after 4 weeks.

On average, Call to deliver generated 4,9K daily orders during lockdown, and 3,2K daily orders after.

Measured digitally, CTD marketing generated in June a growth of +76% impressions, +31% reach and 75K clicks, at a CPC of 0.35 euros.

Going further, Call to Deliver is now a permanent option, along with store shopping and e-commerce: an app is available, logistics is handled by the e-commerce fulfilment partner. The articulation between e-commerce and CTD is quite down to earth:

• E-commerce is for people who have the time to browse and wait for the products, i.e. distant customers, content to have access to a selection of skus from the website
• Call to Deliver is for people wanting to order anything from the nearby department store. SM realized that this was a good option for quarantined people, especially the elderly.

CONCLUSION AND BENEFITS

SM identifies 6 key learnings from this implementation that will be rolled out to all operations:

• Simplicity of process for ease of execution
• Operations involvement for continuous improvement
• “The right person to staff the station”
• Digital advertisement is the best medium to quickly gain awareness
• The best endorsers are the most satisfied customers
• Sharing of best practices is key for common success

CTD’s execution also led SM to consider fulfilling e-commerce from its stores, and not from a central stock as it did before.

At IADS, we also consider this experience interesting for the following reasons:

• Contributing to solidify a team spirit within each store by trying to set up something new, together,
• Impressive speed of execution and deployment thanks to management and teams cooperation
• A good solution proving that getting back in touch with local clientele does not always imply complex setups

video: Click here for more information about the Call to Deliver program

Sources on general situation of Philippines:

nCOv2019.Live: Covid Worldwide statistics

Foreign Policy, 14/03/20, Coronavirus Lockdown Launches Manila Into Pandemonium

Flanders Trade, Coronavirus, the situation in Philippines

BBC News, 04/08/20, Coronavirus: Millions return to lockdown in Philippines

The Diplomat, 07/08/20, Philippines tightens lockdown measures as Covid-19 cases rise and economy plunges

The News Lens, 18/08/20, Philippines Lockdown Lifted, no Relief for Frontline Workers

Manila Bulleting, 03/09/20, Moody’s sees deeper economic contraction in PH

Credits: IADS (Selvane Mohandas du Ménil)