Retail Times hosts a Q&A with M.Video–Eldorado Group’s chief financial officer, Ekaterina Sokolova
The events of 2020 disrupted the global economy across sectors. What was the impact on the retail industry?
The pandemic and the subsequent shift to remote work and school drove a significant change in consumer behaviour. There was a massive increase in online shopping while most of our customers were staying home. This trend is clearly illustrated by the proportion of our online sales in 2019 versus 2020. M.Video-Eldorado Group’s sales totaled RUB 474 bn in 2019 and online sales made up about 33%, or RUB 144 bn, of that total. Compare this with the first 9 months of 2020 when total online sales rose by 113% year-on-year to RUB 195 billion (incl. VAT), accounting for 57% of total sales. This is a significant jump, even with the last three months of the year not included in this data.
We also see a great impact of smartphone-driven trends on online growth, as video consultations with shop-assistants and payments via mobile apps become more popular. In-app sales of M.Video-Eldorado for 9 months of 2020 have grown almost 20 fold over the past year.
In addition to this surge in online activity, our data also reflects a change in the types of products our customers are buying the most. Our consumer electronics market saw robust growth of 16% during the first nine months of 2020, as customers upgraded devices both to make working, studying, and simply spending more time at home more comfortable. To break that down further, M.Video-Eldorado Group’s sales of laptops and similar electronics rose by 35%, while sales of refrigerators, stoves, coffeemakers and other household appliances grew s by 20% versus 2019..
Certainly, the pandemic created volatility, but another theme has emerged wherein the Covid-19 served as an accelerator for existing digital transformation projects. How did this play out for M.Video-Eldorado Group?
The events of 2020 served as a true test of our One Retail strategy. Initially launched at the beginning of 2018, it connects the online and offline experience for customers through a single platform with convenient, seamless, 24/7 smartphone access.
In response to the pandemic’s impact on the market, we refocused our marketing and operations to enable the seamless mobile- and web-centric customer experience the One Retail model provides. Using the M.Video or Eldorado mobile applications, customers can scan the QR code on the price tag right at the store shelf and pay in a couple of clicks and then pick up the product they like without queuing and waiting. You can also make a contactless payment in the application and opt for a courier delivery. Every fourth purchase at M.Video is completed online via a customer’s smartphone.
M.Video has begun using the omni-channel model long before the pandemic, so we were working form a strong base when Covid-19 emerged. Online and offline stores provide quick, complementary access to the goods we offer. Behind the scenes, this requires a seamless system that ensures unified assortment, prices and services across all touch points.
Now that many of the restrictions have been lifted and brick-and-mortar locations are open for business, are you integrating any of the benefits of shopping online into the in-store customer experience?
More than 15,000 of our M.Video shop assistants are using smartphones with a special app connected to all back-office data in order to provide the most tailored customer service and personalized offers in-store.. The app helps our assistants to check-in with customers in stores in the same way they would offer support and targeted offers for an online order. This technology enables us to compare and analyze client preferences and behavior both online and in stores, providing insights to make the customer experience both more convenient and more personalized, with unique, customized recommendations for each individual customer.
We also enhanced our One Retail approach by launching our video consultations service for M.Video customers in April. Sales personnel can demonstrate products, explain technical details, answer questions, and help customers compare various models. TVs and built-in kitchen appliances are the most popular products for video consultations, and we have provided more than 50,000 video consultations to date, with every fifth session resulting in a purchase – ten times the average online sales conversion rate.
In addition to making adjustments to ONE RETAIL, how else did M.Video adapt to the spike in online consumer activity?
Goods accessibility, fast delivery and customer service are in focus for us. Integration of all of our systems allows us to get an order into the store within 15 minutes of it being placed online, via the website or in the app, making ours the fastest service on the market. We have improved our logistics and fulfilment functions through express delivery via taxi providers, efficient inventory management and proactive use of our extensive retail chain to ensure accessibility and provide the shortest delivery times for all online orders. As an example, we collaborated with food retailers to launch a service for customers in and around Moscow to pick up online orders purchased at mvideo.ru or eldorado.ru at grocery stores. This ensured that our customers could collect the electronics they wanted during their food shopping trips, so it limited their social contacts by minimising their need to travel around the city. Another partnership we have is with Russian Post, which enables us to increase access to small towns around Russia where we do not currently have store locations.
We also expanded our range of household appliances, electronics, and related items using a marketplace model, to ensure we continue meeting changing customer needs.
Looking ahead, what trends will dominate the retail space in the coming year?
The pandemic has highlighted how susceptible we are to forces beyond our control, and we believe this will translate into a stronger focus on environmental, social, and governance (ESG) themes in 2021 and beyond. In 2020, participation in our electronic waste recycling program provided evidence that M.Video-Eldorado Group customers feel strongly about sustainability. Currently, 450 M.Video-Eldorado stores accept electronic devices in any condition, and originally purchased from any brand for recycling. Our data shows that as of November 2020, more than 99,000 devices and more than 1 million batteries have been collected – a big success, despite the disruptions and the challenges people have faced over the past year. We expect the participation in our recycling program to continue to grow and M.Video-Eldorado Group will be supporting this growth by adding more than 200 stores to the program in 2021.