FUNDES commits to developing the 'Strengthening Traditional Retailers in Mexico' program, an initiative aimed at improving the current situation of small retail stores by increasing their performance and competitiveness by providing them with modern business techniques in areas like personnel issues, logistics, finances, strategic management and marketing skills. The goal of the program in a first phase is to transform these shops into viable enterprises through training sessions in modern business practices. In a second phase, the program aims to improve the infrastructure of the stores by providing them with the needed technological support and a modern appearance.
The initial stage of the program involves the selection and training of the program director who will work exclusively on this initiative, followed by the building-up of a team of 10 country leaders, all trained with all tools, knowledge and skills to properly carry out the program. This phase also includes the design of an on-line training module with corresponding manuals and two regional training workshops (one for Central America and another for South America).
Each country leader will carry out a sector diagnosis study, both on the general situation and on specific problems found in their respective small retail store sector. Communication means are available to ensure an adequate comparison of progress and the sharing of experiences between countries. Each country leader will select and train the team of consultants (approx. 50 in each country). The training of the local teams includes a start-up workshop to first understand the country sector diagnosis study and then to transfer the necessary tools and guidelines.
This phase furthermore includes the launch nationwide media campaigns in order to create the awareness amongst the small retail store candidates, interested in participating in the program. This step is followed by the classification of business group types (clusters) and the selection of eligible shop owners, interested to participate in the program given the rules and regulations set out in the contract documents.
Once the groups are classified and well organized, the first workshops will be carried out. The objective is to fully comprehend, validate, and classify common and individual issues and problems. The findings of this workshop are a key outputs for designing and implementing of the action plans to ensure reaching the programs' goals, i.e. to improve the competitiveness of small, traditional retail stores.
The action plan is implemented through individual and group training sessions accompanied with consulting activities for a period of three months. Simultaneously, the stores are modernized with the necessary equipment and with new technology, not only to be more attractive to their customers, but also to be capable of providing additional services like the payment of basic services, credit card facilities, internet access and others.
At the end of this phase, it is expected that the small retail stores will be prepared to increase their income and their number of customers. This progress is monitored through evaluation activities which allow comparing their sales performance and other pre-established performance indicators before and after the program implementation.
Most of the small retail stores are owned by entrepreneurs from the low income segments (LIS), who need to get acquainted with modern business methods in order to mitigate the decline of their market share. This loss is due to major economic disadvantages (e.g. higher purchasing costs, inefficiencies, lack of economies of scale) which are common in the traditional food retailing. Furthermore these shops have lower output levels, which are often due to lower product quality, limited variety, frequent stock-outs, higher sales prices, unpleasant shopping environment and lack of entrepreneurial abilities. 'Mom and pop' shops are typically very small, family-operated, and employ marginal or informal labor.
This commitment is based on expansion of a successful pilot program in Mexico. This model was by no means designed to subvert the 'supermarket revolution;' rather, FUNDES aims to improve conditions for the small retailers by enabling them to continue to be a player in this market and to give the affected poor people a range of job options. The initiative is currently running with 500 small shops and has already provided several very positive results, e.g. an increase in sales of 32% and in numbers of customer of an impressive 47%.
Additionally the program provides positive externalities in the area of capability development in the participating countries, since for each clusters of 20 stores, FUNDES plans to train one local consultant in the business of running a modern small business, (a total of approximately 500 specialists will be developed and deployed in the course of the project). Energy-saving initiatives will also be implemented, thereby supporting a more sustainable development.
This commitment will initially and gradually be implemented in all 10 countries where FUNDES has offices. Eventually, this proven business model can easily be replicated in other countries in Latin America or even other geographic regions through allies or partners.