While COVID-19 has been far from selective in terms of the impact it’s had on nations around the world, the food and beverage industry has possibly suffered more than most. The risk of contamination and restrictions on going out mean that fewer customers are taking part in the market.
This is no less true in Indonesia, where the food and beverage industry is one of the largest contributors to national gross domestic product, according to the CEO of bakery group Mount Scopus Indonesia, Edison Manalu.
But the pandemic has cut projected industry growth from about 1.95% to –22% , and Edison says customers are now reluctant to visit supermarkets. This is evident in big cities around Indonesia such as Jakarta and Bali, where F&B businesses have seen decreases of up to 80% in daily earnings.
But Mount Scopus has fared better than most, and it’s down to a strategy Edison undertook long before COVID-19 made an impact, starting with its ecommerce presence. “We reviewed our digital payment collaboration,” he says.
“Previously we’d only partnered with Gojek in an exclusive agreement. But there’s not much incentive for our customers if we only have one payment gateway or digital online delivery platform.
“So last year, we added more online delivery platforms after looking at customer behaviour trends in Indonesia. I also strengthened the call centre because we’re in almost 20 bigger cities all over Indonesia. We’re really trying to give the customer easy access to make orders and receive deliveries.”
While undertaking all of these expansions to online capabilities, Mount Scopus has centralised production, cutting back to one manufacturer in Bogor, near Jakarta. Previously production was undertaken in-store. The move is designed to improve quality control and implement standardised practices.
The business also invested in an integrated IT system to better manage and analyse inventory and sales. Further, Edison took a long look at the company’s physical locations. “We did analysis when I took over this company last year and saw that our store outlets located in malls didn’t contribute significant revenue for us,” he says.
“The EBITDA was actually negative. Last year in February, I closed nine stores in malls because the trend of people visiting malls had already decreased.”
For us, the digital platform is kind of a complement to the bricks-andmortar store.
One could be forgiven for thinking that Mount Scopus had some sort of mystical foresight going into 2020, because each of these developments meant that the COVID-19 crisis wasn’t as severe for the company as it could have been.
Over the course of government lockdown, the business’s 85–15 split between in-store retail and ecommerce shifted to 55–45, and Edison says this isn’t unique to the bakery Mount Scopus, however, was exceptionally well-prepared, to the extent where it is still seeing growth.
Indeed, a new concept store, The Harvest, was opened in July – a bold move in the era of COVID-19, but one demonstrative of the company’s enduring growth. The new store’s design makes heavy use of customers’ insights and expectations around decor, ambience, services and dietary options. “I’m a firm believer in bricks and mortar and digital,” Edison says.
“They each have their own strengths. That’s why we keep balancing and developing the concept. “The physical store is very important to us as our showcase to customers, where they have their first experience with us. The typical digital customer has already had experience visiting our stores and looking at the product. Then for repeated orders and so on, they will go through the digital platform. For us, the digital platform is kind of a complement to the bricks-and-mortar store.”
While it may seem his concern for the customer is paramount, Edison takes a comprehensive approach to achieving “wisdom” in decisions, considering multiple perspectives. “What’s wise for you maybe isn’t wise for me,” he says.
“That’s why we have three different criteria for fulfilment of wise decisions. The first is what’s best for the customer; the second is what’s easy or simple for the team; and the third is what’s ethical for the company. As long as a decision fulfils these three criteria, it’s the wisest decision we can make.”
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