Turning A Crisis Into A Catalyst For Change

Maria Miralles: Let’s discuss the impact of the novel coronavirus on MediaMarktSaturn, with more than 1,000 stores in 13 countries and roughly 55,000 employees, the leading consumer electronics retailer in Europe. Mr. Reverter, how does your company cope with the pandemic?

Ferran Reverter Planet: First of all: We see crises, whether internal or external, as an opportunity. Obviously, COVID-19 – along with the restrictions – is an external one. And all in all, the lockdown accelerated our transformation to an agile, customer-centric omnichannel retailer. It served to strengthen our online business, a strategy we were pursuing prior to the pandemic.

So, the epidemic was a kind of booster?

Yes, you can see it this way. Before the coronavirus there were colleagues who were not convinced of the online business strategy. They were concerned that it would put pressure on prices, that the competition was too strong, and that we would find it harder to maintain margins and make money. Then the coronavirus hit, and it turned out that our strategy was working. We now have a new, high-performing online platform and well-operating logistics capabilities. During the lockdown, every day was like Black Friday for us. More importantly, there is no way back to our former way of doing business. Since COVID-19, this is crystal clear to all our people. The pandemic is terrible, no question, but the virus has also driven necessary change.

What were the key success factors to mastering the pandemic?

There were three pillars that helped us succeed: Firstly, it was about mindset, or what I would call attitude. From the get-go, the tone from the top was that this was an opportunity for us, and we needed to be positive as we strengthened e-commerce in a very big way. Our attitude was that while experience selling online was important, fresh abilities, enthusiasm, and new ideas are even more crucial.

And the second pillar?

The second pillar had to do with a sense of urgency. On the internet, speed is essential. But to achieve speed, you need to be prepared. So we changed our structures, a program that was underway well before the start of this crisis. But we had to adapt, and we had to gain new skills in the face of COVID-19.

Can you give examples?

At the start of the crisis, we set up a task force focusing on procurement, marketing, and logistics. We shifted our resources towards e-commerce. So, for example, we did away with country-based marketing budgets and focused company-wide on online marketing. Looking at logistics, the supply chain collapsed temporarily due to COVID-19, and it was no longer possible to order certain products. But we reacted flexibly and quickly and set up a new service called “ship from store”. We used the warehouses in our stores to fill the rapidly increasing online orders. Online and offline merged in record speed: The salespeople from the stores switched temporarily to the warehouses and by deploying an app that enabled them to locate where the items were in our store warehouses, we made sure that customers received their orders quickly. As a result, we were able to do in three or four days what would have been unimaginable a few years ago. Prior to the crisis, no one would have believed we could have achieved that.

You mentioned three key success factors …

Communication is the third pillar that underpinned our approach. Communication is crucial, especially during a crisis where people feel lost. We began using our digital tools more intensely, tools like Yammer, our internal social network, we sent out weekly messages from the board of directors and video messages to make sure that everyone in the organization was in the loop and felt close to the company. Communication is often underestimated, wrongly.

In talking to other retail leaders, many of them had to customize or to adapt to the crisis in each of the countries they operated in because each country was different. How did you handle it?

In general, we applied the same approach in each of our countries. Of course, there were some differences, but the overall strategy was the same, and it was implemented immediately. There was the shift to online and a focus on the protection, health, and safety of our customers and employees.

What do your key learnings from covid mean for your stores? How do you see the role of the stores in the future?

At MediaMarktSaturn, the stores are the heart of the company and of our omnichannel approach. But, even before the COVID crisis, we understood we needed to change the role of our stores and to remodel them. We started to define and focus on four different store concepts: large flagship or experience stores; core stores for availability, advice and services; smart stores for pickup; and finally shop-in-shop concepts that offer proximity.

What goals are you pursuing with the new store concepts?

It’s quite simple: We want to sell more and provide even better service. We want to further improve the customer experience, and at the same time increase market penetration and productivity. The different store formats contribute to this approach. For example, in our new flagship store in Milan, we tripled the space of our so-called experience areas, and the results are amazing: We generated much more traffic, increased our sales by almost 40 percent, and improved the net promoter score significantly. What we have also learned: Flagship stores are the stores that people are still willing to drive to. While on average people are reducing the amount of time to seven minutes to get to a store by car, for the flagship stores, they are prepared to drive longer. 

That means, to offer proximity, you have the other store formats?

Right. For proximity, service, and advice. Our core and smart stores are contact and fulfillment centers that above all allow for greater penetration to online. We see that the combination of our different store formats is creating more sales in both online and offline. Combining offline and online is the perfect fit – and the big differentiator for us.

Since the role of the stores changes – what about the role of your people in the stores?

It changes a lot. Their task is to add value and provide service as well as advice. Our people in the stores no longer need to think about replenishment and administration. Instead, they can focus on what really matters: the customer. We equipped all colleagues with smartphones, having all necessary data at their fingertips. They see everything at a glance: stock, product availability in the store or in the central warehouse, they can match competitors’ prices, and so on. And they feel much more comfortable thanks to the smartphone in their hand.

Do you believe that MediaMarktSaturn is becoming a real ecosystem?

We have a clear goal: We will build the biggest omnichannel platform in Europe. We turn technology into unforgettable experiences, and, above all: we believe in our people. They make the difference, especially in a tech-driven world. We are in a privileged position. No one else connects the online world with the stores like we do. Done right, it's the perfect combination. Our suppliers tell us the same, by the way. We are a “House of Brands”, we know everything about the products. We personalize them to the individual needs of the customers, tailor the appropriate services and accessories, and make the final recommendation – whether in the store or online.

How important is digitization for the transformation of your company? Do you need further investments in terms of automating processes and implementing more sophisticated algorithms?

To further digitize our company is a key element of our way forward. Our new website, our new consumer app, our new employee app – this is all part of what we call becoming a smart retailer. Our company is good at adopting new technologies and at creating new technologies. And we’re further accelerating here.

Do new technologies and data reinforce the trend toward personalized offers?

That’s for sure. The future of retail is data-driven. We are developing into a data-driven, intelligent retailer. Data analytics will be the decisive factor in determining our assortment. It will be key for individualized products and service offerings based on customer insights. Everybody wants personalization. It’s like going into a bakery where the staff knows you and has the bread that you want ready for you. Knowing and serving your individual taste – it’s one of the best experiences you can have. This is the kind of experience we are trying to offer our customers.

Let’s assume that we will be able to get COVID-19 under control at some point in the near future and we can return to normal life. Do you think that the way customers are behaving now is permanent?

We see COVID-19 as accelerating many of the trends that were already in place — above all the trend to online. Shopping behavior has changed, no question. But, that’s not to say that people will no longer shop in stores – they will come back to the stores, but they will return much better informed. We expected that this would happen and were moving in this direction, and the pandemic accelerated the process. 

Because of the stay-at-home regulations, demand has been huge for equipping homes with consumer electronics. But will there be a slowdown in demand in near term?

You are right that our sector benefited from high demand because technology enabled people to get through the crisis. But I am also convinced: technology will remain crucial in the future. The future of consumer electronics is bright. Technology is embedded everywhere, and the market is becoming bigger: New products for the home office are in demand, home schooling, gaming, and new product categories like health will be expanded. While the boom that we see today may not continue at the same clip, we strongly believe the sector will continue to grow.

We are observing discussions and debates about potential consolidations. In some retail sectors, we are seeing big investors trying to basically merge different companies. Do you see that kind of movement in your sector?

There will be consolidation, for sure. The sort of speed and investment necessary in the industry cannot be maintained in every company.

Mr. Reverter, you have been commuting from Barcelona to Germany on weekly basis to manage the business. Given the increasing stress and tension in the system, how have you coped with managing the business and finding a balance in your personal life?

Especially in times like these strong leadership is key. That also means to be present on site. This is a company of 50,000-plus people, and everyone feels it if the captain is not on board. I know my role, and I’m aware of my responsibility. My family accepts it and has learned how to handle it.

Has there been a particular highlight or “wow” moment for you during the crisis?

The real highlight has been the mentality and attitude of our people. This crisis caught everyone off-guard. No one was expecting anything like this. But I felt that if there’s any company that can rise to this challenge, it was ours. I sat with our management team and told them it was an opportunity to put in place all the things we had been working on – and at the same time, we would take care of people, protect them, and make them feel secure. I felt that the company would rise to the occasion and that we would find a way. After one week, I realized we were going to get there.

Is there something that you learned earlier in your career that helped you cope with this crisis?

My experience over the years in Spain and Italy helped me a lot for this situation. In general, Spanish people have a lot of experience crises — and you should never forget: When something goes wrong, it’s important to stay focused on what really matters.