Luis Guillermo Demis assumed the general management of Farmacias Benavides in the third quarter of 2020. Just at the time when, due to the ravages caused by the pandemic, the company was experiencing a 20% drop in same-store sales, that is, pharmacies with more than a year of operation.
His previous step as Finance Director at the pharmaceutical company allowed him to draw up a strategic plan to move the chips at his disposal. The first decision he made was to stop the company’s expansion plan and manage cash flow.
The priority was in the assets and in supplying the shelves of personal protection products that were in demand due to the pandemic, such as face masks, alcohol, cleaning towels and antibacterial gel to increase sales capacity. During the second half of the year, inventory in this category grew 250%.
However, stocking a category like this was not an easy task. According to Adrián Ávalos, manager of Special Studies of Kantar Mexico’s Worldpanel division, 49% of Mexicans did not use antibacterial gel before the pandemic. And the purchase of this product also increased with the contingency because commercial establishments had to apply it to all their visitors, as a form of defense to avoid the spread of COVID-19.
“The pharmaceutical industry was not ready for this demand. We began to suffer part of the shortage, at the beginning we could not react at the speed of what was happening with the coronavirus. That was when the availability of the product became very relevant and what helped us were our alliances and presence of the group in other countries ”, says Demis.
For Ávalos, a success in the pharmaceutical industry was to present more accessible versions – in size and price – of antibacterial gel, in a context in which hygiene is more important than ever. Demis was aware of this, so part of the strategy to cure COVID-19 consisted of offering personal care kits and polishing the shopping trip within the group’s pharmacies, with greater visibility of these packages and their own brands like Almus.
Increasing the sales capacity with the products in demand did not mean a palpable growth for Farmacias Benavides. However, it closed 2020 with a 9% recovery, and a clearer path to follow to achieve the financial health it had before the pandemic.
Steps with caution
In 2019, Benavides had the firm aspiration to open 150 pharmacies per year, today the company’s intention is to open one pharmacy per week starting in September. “I am not a big believer in putting a number, I trust more in the desired return and in the power of a pharmacy that meets the expectations of what you want to offer the customer,” says Demis.
Farmacias Benavides has a 103-year history and presence in 25 countries. In Mexico, it has a network of more than 1,130 pharmacies, a catalog of more than 16,000 different commercial and own-brand products, more than 400 medical offices and a high-tech distribution center. The chain is operated by 8,500 employees.
As a result of the health contingency, painkillers and vitamins are among the most purchased products in pharmacies, according to Kantar. Lilia Valdés, shopper & retail manager of the Worldpanel division of this market research agency, indicates that in this channel the disbursement in the Food, Beverages and Dairy baskets increased. In one year, 75% of families in Mexico spent an average of 1,016.62 pesos, with a ticket of 113.22 pesos and nine shopping trips.
“The proximity and variety of products that can be found in this channel have helped its development since buyers do not have to travel so far from home to buy from basics to indulgences,” he says.
The intention of Farmacias Benavides is for the consumer to see it as a health hub, beyond being a retail outlet. The manager considers that the firm has the potential to achieve this, since they not only offer medicines and basic food products that satisfy other needs, but also solutions, prevention and support in chronic diseases.
On the other hand, the pharmaceutical has been one of the few companies that have not rushed their entry into electronic commerce. It recently renewed its loyalty program and has reached more consumers through Rappi. A plan with skill, since you do not want to enter the world of electronic commerce with a page that generates dissatisfaction and that lacks a good value proposition to the customer.
“We have 75% progress in our e-commerce. We want to be sure that it really offers a pleasant experience because today there is a high bar of what a user expects from any e-commerce in general ”, concludes Demis.
