The first order of business for Fernando Martinez when he was appointed CEO Director General of supermarket chain H-E-B Mexico in 2019 was improving employee retention rates. “The figures over three or four years had dropped to around 55%, which had an impact on the costs of our business as well as our customer satisfaction and shopping experience,” he explains.
Together with his leadership team, steps were undertaken to reverse the downward trend. “We started to invest in our pay and benefits program, especially for those at the base of the pyramid,” he continues. Today, the figures speak for themselves: “Pre-COVID-19, our retainment had risen to the mid-70s,” Fernando says.
Recently, those numbers have been even higher as employees prioritize job security in these exceptional times. “As a consequence, the standards in our stores and financial results have improved,” he adds.
As an essential business, H-E-B’s 69 stores have remained open during Mexico’s coronavirus lockdown and looking after its partners (the internal term for employees), customers and suppliers has been the immediate priority.
While, like everyone else, Fernando acknowledges that “we’re still learning”, quick actions and firm protocols have been enacted, from the creation of a dedicated committee of senior leaders who set the tone for safe operations to increased sanitary measures instore and the cocooning of over 1,800 at-risk employees.
“We’ve also granted monthly bonuses to all our partners instore for their extraordinary effort and implemented a dedicated medical coverage for all partners who are high risk or return a positive diagnosis for the virus,” he says. Specific programs have been created to support the small business community as well.
“For our suppliers, we’ve designed a financial aid program that promotes favorable payment terms for them,” Fernando explains. “We also have more than 1,000 tenants in our shopping centers and we have tailor-made a support program to each to ease the pressure of keeping their business afloat during the pandemic.”
In addition to year-round initiatives designed to fight hunger, promote education and support health conditions in the wider community, H-E-B Mexico donated medical equipment to the Red Cross; face masks, shields and pantry supplies to vulnerable municipalities, and personal care packages to senior citizen shelter homes during the pandemic.
The company has also matched every donation made by customers dollar-for-dollar to support its 3,400-strong team of voluntary grocery baggers; the majority being vulnerable senior citizens who have been sent home due to the virus.
Taking care of its community has been at the core of H-E-B since it was founded in San Antonio, Texas in 1905. The company arrived in Mexico 24 years ago and Fernando believes its success in the country is due to two factors.
“All 15,500 partners deliver the best shopping experience for every different customer’s needs and expectations,” he says. “Also, we adapt to every market we enter into, rather than making the market adapt to us. We don’t work on a one-size-fits-all approach.”
With lockdown restrictions starting to ease in Mexico, Fernando can begin to look to the future and his renewed plans for growth. “Managing the balance between densifying our main markets in the north-east of the country and gaining new markets in the central part of Mexico is essential,” he explains.
Alongside bricks-and-mortar expansion of stores and distribution hubs, there is also the need to continue to evolve its ecommerce and digital capacities. “Our value propositions are similar online and offline, but our dominance isn’t. We’re putting a lot of effort into improving this,” he says, although the global health pandemic has given this part of the business a big push.
“In the last few months, our online base has grown 100% more than we expected.” For Fernando, this is just one of many changes for which COVID-19 will be the catalyst. “Until now, most business leaders have been too passive about our roles in communities, our product that we serve and the society that we are part of,” he says.
“Businesses driven by financial KPIs aren’t necessarily in demand. However, those who engage with society are – and we need to see more of them. Company leaders need to step up and be more of an agent for change.”
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