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.

Guatemala City

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.

The Initial Research

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

Arriving on Saturday, May 13th, we were greeted by the Cemaco team for a tour of the city.  We stopped by a local market, picked up groceries, and of course visited a Cemaco store.

First Days at the Office

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.

Weekend trips 

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.

Final Presentation

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!

In Conclusion

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!

Berkeley Haas IBD 2017 – Aramis Menswear, Sao Paulo, Brazil

Written by Diane Chiang, Barun Mazumdar, Abhishek Mishra, Kalyan Pentapalli and Priya Vijayakumar

Weekend before in-country: Foz de Iguaçu

Five happy and excited Cal bears arrived at the Iguaçu airport on late Friday evening after spending almost a day in air and in connecting airports. We checked in at the beautiful Belmond hotel (which overlooks a small portion of the falls) and had our introduction to authentic Brazilian cuisine and Caipirinhas. It was love at first sight! The Iguaçu falls were absolutely breathtaking – on Saturday, we took a short walk along the waterfall trail and a boat ride on the Iguaçu River before flying to Sao Paulo.

The beauty and grandeur of the waterfalls made this short detour to Iguaçu totally worthwhile.

We arrived at Sao Paulo (SP) on Saturday evening and to kick off our 2-week stay at SP, we went to the acclaimed chef Alex Atala’s restaurant – D.O.M for an amazing fine dining experience. We spent the rest of the weekend exploring Sao Paulo and fine-tuning our Day of Arrival presentation.

First Week at the client site in Sao Paulo

We had an early start on our first day at Aramis’ office – Fabio Davidovici and Luan Silva with whom we had been collaborating since the start of our project greeted us. We presented our “Day of Arrival” presentation to Richard Stad (CEO) and Fabio. It was a very interactive session peppered with questions and interesting discussions around retail trends, brands, and competition.

Because of the high level of engagement, our meeting that was initially scheduled for an hour ran for over two hours. Richard appreciated the groundwork we had done while at Berkeley, it was also a great opportunity for us to learn more about the company and its challenges directly from the CEO. At the end of the first day, Fabio gave us a tour of one of the stores to round out the day.

On Tuesday, we spent the entire day visiting Aramis’ stores at various malls in Sao Paulo. This was an amazing way for us to get to better understand their products, store layouts, and store employees. We interviewed many store managers and sales people to understand the challenges and processes within the stores. We also visited many of Aramis’ competitor’s stores. We shared our initial feedback, observations, and ideas with Fabio, many of them centered on visual merchandising in the store.

Throughout the course of the week, we met with directors and managers across different functions – Marketing, CRM, Inventory planning, Warehousing, E-Commerce, Store Supervisors, Retail, HR and Customer Service. We also got a chance to have lunch on one of the days with the Founder, Henri Stad. Although we experienced a language barrier, Fabio attended all the meetings with us and helped with translation and provided more context.

We also scheduled meetings with stakeholders outside Aramis. We had a very insightful discussion with Fabio Matsui from Cypress Capital (HAAS ‘03) where he walked us through the Brazilian apparel retail industry and the various participants.

We also met with Daniel Maladrin (HAAS ‘05) from 2BCapital/Bradesco – the PE firm that invested in Aramis few years ago. Daniel introduced us to Leonardo Santos from Semantix, which was another company that the PE firm had invested in. We invited Fabio to join us for our meeting with Leo, where he walked us through the omni-channel strategy he had implemented at an American retailer and the challenges he faced launching in Brazil. We identified many synergies between Aramis’ omni channel implementation and the current work that Semantix is doing, and the two companies plan to start some initial discussions to collaborate.

By the end of week one, we learnt a lot about the Brazilian people – their food, culture, and working styles.  Fabio spent a generous amount of time to ensure we were comfortable, got enough face time with Aramis employees and explored Sao Paulo the way locals do.

 

Splendid Salvador and Refreshing Recife

We took a late flight on Friday to Salvador to experience the northeastern part of Brazil. We spent Saturday at Salvador exploring the churches, beaches and the colorful Pelorinho neighborhood. The highlight of the day was the amazing Bahian cuisine we had at Pariso Tropical. This restaurant won our top vote among twenty other strong contenders for the best food of our entire trip! Later that night, we flew to Recife and spent our Sunday exploring Recife and nearby Olinda. We returned to Sao Paulo on Sunday night.

Monday started with a series of previously scheduled meetings.

Talia from Visual Merchandising was the first meeting; she travels around the country for store openings and renovations. She has been re-working the store layouts to make them look fresh and cater to younger demographic. The major challenge she faces is convincing the store managers that the new layouts will lead to increased sales. We then met with Felipe from Store Sales Management who manages all store managers across the country and was able to share how sales strategy has changed over the years and lately with the advent of new POS technology.

 

At the end of each day, we debriefed and communicated our findings till date and next steps with Fabio. We had dinner with Fabio and his wife Fernanda, who took us out to Don Veridiana, which many locals claim to have better pizza than in Italy.

On Tuesday, the team interviewed Mariana, Director of Product, the final scheduled interview and learnt more about how Aramis designs and sources its products. With interviews now over, we focused on consolidating our findings and clarifying any remaining questions we had. After a full day working session, the team agreed to expand the scope beyond assortment planning and omni-channel to include other functional areas and do a 360 analysis.

On Wednesday, the team marched towards the converge phase and began to build on the final business plan to the client. We separated our recommendations into multiple functions including: Inventory Planning (Assortment and Replenishment), Customer Relationship management (CRM), Customer Service, Data/IT Integration, Store Experience, Multi-channel, and Internal Communication. Throughout the day, we had multiple calls for clarifications, and by the end of the day, we had an initial draft that we shared with Fabio before we headed out for some excitements! In the evening, we went to watch football match between two bitter rivals: Palmeras and Colinhas, accompanied by Fabio and Luan.

Thursday being the final day, the team had an early start. We received feedback from Fabio on the initial draft, and decided to move forward with additional deep dive into assortment models. We had dinner at the CEO Richard’s house, along with his wife and son. We learned about Richard’s travel experiences, and discussed his vision about emerging technologies in retail. After dinner, the team headed back to the hotel for the final home stretch of our business plan and wrapped up around 4am.

Friday, the last day at Aramis, was quite a bittersweet experience. We started the day with our presentation with Richard (CEO), Fabio and other executives. Richard showed strong interest and agreed with most of our findings and recommendations. He showed special interests in the assortment models that we recommended and believed it could be quickly implemented. Richard appreciated the fact that we had dug deep into the entire organization, and that we understood the sentiment and culture of Aramis in such a short timeframe. Though rewarding and relieved, it was quite a bittersweet moment when we finally had to say good bye to everyone at Aramis.

Brazil Finale

For the final weekend in Brazil, we headed to Rio de Janeiro. Over the next two days, we experienced the landmarks, nightlife, shopping, and cuisine. The experience of the IBD program has been beyond our expectations and cannot be expressed in words. We appreciated the opportunity to work with Aramis while experiencing the incredible country of Brazil. The five of us also built such strong bonds during the trip that we know we can rely on each other.