Que Alegre! Updates from Guatemala City
Written by Peter Wasserman, Ian Collazo, Kevin Schuster, Michelle Hernandez and Rachel Garrison
FTMBA students Peter Wasserman, Ian Collazo, Kevin Schuster, Michelle Hernandez and Rachel Garrison traveled to Guatemala City during May 2017 to work with the fourth-largest, family-owned, home goods, hardware, toy, and baby retailer in Guate mala: Cemaco.
Our team arrived in Guatemala City during an exciting time for retail. Last year, the retail industry grew 13%, with growth driven by middle/high-end of the market in Guatemala City. Our client Cemaco benefited from these demographic trends, increasing revenue despite growing competition, doubling the number of stores, and receiving recognition as one of Guatemala’s most recognized brands.
Cemaco came to IBD looking for big ideas to meet aggressive revenue and profitability goals. Among the five pillars for growth highlighted in the 2020 vision, our team was tasked to develop strategy and implementation roadmap to become the dominant e-commerce retail player in Guatemala.
E-commerce is nascent but growing in Guatemala City. In 2016, e-commerce grew by 20%, mainly used by the young, urban, upper class. Cemaco launched their beta e-commerce site in April of this year, allowing us to work in parallel with the team and project.
Prior to arriving in Guatemala City, our team conducted secondary research on the industry, competition, company, and customers to make the most of our time in-country. We sent a survey to 600 active and 250 lapsed Cemaco customers and received 80% response rate. This amazing level of loyalty and commitment from the customer base was incredible – we were excited to meet the team and customers during the coming weeks!
Arrival in Guatemala City
Our day of arrival presentation gave us helpful feedback to move forward with our proposal. Meeting with the team, we felt incredibly welcome. Not to mention, it was Peter’s birthday! The team took us out to lunch and we celebrated over cake!
Learning about the market
To learn about the market, we focused our time visiting Cemaco and competitor stores, going to the warehouse to see the e-commerce logistics firsthand (and ride a forklift together!), and conducting in person interviews at Cemaco stores. These experiences helped us understand
- What obstacles/profitability challenges Cemaco will face: Labor is very cheap in Guatemala. From a logistics perspective, Cemaco has been very flexible and fast, figuring out how to package and deliver e-commerce orders in 1-2 days
- How Cemaco sets itself apart from the competition: Cemaco is a customer first company that puts its stores at the center of its experience. Cemaco stores are welcoming, bright, and customers enjoy spending time browsing the wide variety of products
- Why customers love Cemaco: As an established, family owned company with Guatemalan roots, customers are extremely loyal. They feel that they can find everything they need for their homes at Cemaco, and expect to find high-quality products.
As our classmates pointed out to us, our team didn’t just work…our client Cemaco planned amazing weekend trips for us. First, we went to Lake Atitlan, where we enjoyed an amazing view of the lake, mountains, and volcanoes went on a nature hike with swinging bridges and saw ancient Mayan ruins.
On our second weekend, we hiked the Pacaya volcano where we roasted marshmallows on top and visited the beautiful, historic Antigua. Walking down the cobbled roads, we took in the architecture and culture of the city – from carrot ice cream to a speakeasy bar called “No Se,” we tried to find all the hidden gems that Antigua had to offer.
Back at work, in our final presentation, we recommended that Cemaco prioritize its growing B2B business through an e-commerce platform, and developed a customer-first omnichannel experience plan for both existing and new customers. We were especially excited about our plan to partner with apartment buildings in the nearby Zone 4, known as the “Silicon Valley of Guatemala City,” where first time renters were moving out of their parents’ home before getting married. The team took us out to drinks to celebrate!
Guatemala is an amazing country and the people are incredibly warm and welcoming. We were so impressed by the culture that Cemaco has created and kept strong over the past 40 years, encouraging their employees to move across functions, pursue continuing education, push for corporate social responsibility, and experiment with new business strategies. We are excited to see what’s next for Cemaco!