Dear customers, employees, shareholders and suppliers
2020 will be a year mankind will never forget. A year in which a global pandemic caused the loss of human lives, sadness, countless of wrenching stories, and an economic downturn like nothing the world had seen since the Great Depression of 1930.
It was a difficult year for El Puerto de Liverpool as well. In March we had to shut down all our stores for three months, and reopened them only gradually. With stores closed in some states, limited store hours in others, restrictions on shopper traffic and other measures implemented by authorities to reduce the risk of contagion, we ended the year with the stores in Mexico City, the State of Mexico, Puebla and Hidalgo closed once against starting December 18th—normally our best week of the year.
We set ourselves two goals in March:
- Ensuring the Company’s survival—which meant protecting our cash position and cash flow.
- Protecting employees—we were intent on making sure no one at El Puerto de Liverpool lost their job due to the pandemic.
I am happy to report that we met both of these goals. The Company closed 2020 with a balance sheet stronger than it had at the start of the year, and we preserved all of our more than 70,000 jobs. But more than that: amid the tragedy, we also discovered a new sense of innovation, empathy, transformation and evolution, stronger than ever before in our history. The need for sales and the difficulty of selling in this context inspired us to shift toward a lighter and more agile way of working, introducing changes more quickly and making progress that would have been unimaginable at the year’s beginning.
During the months our stores were closed, we assisted all our employees who work on a commission based salary with a monthly bonus; to our credit card customers, with a couple of months’ grace period on repayment, and facilities for restructuring and paring down their accounts; to our shopping center tenants, with rent forgiveness, discounts and deferrals to help them keep their businesses afloat; in addition to many other actions we took to help the communities where we are present.
When the pandemic broke out, our digital sales grew to levels we had not expected to see for five years to come. This helped offset the impact of store closures, but it also caused a collapse of our logistical system and saturation of our systems and call center. We were able to recover quickly, however, particularly in logistics, and succeeded in delivering 23 million packages to our customers’ homes this year. In less than a week, we introduced a shop online and pick up in your car system; for our call center we used WhatsApp combined with artificial intelligence to serve 4 million shoppers. Thanks to these and other actions, digital sales accounted for around 29% of our total sales this year, a level we had not planned to reach for another five years. With the assistance offered to credit card customers and shopping center tenants, our non-performing loan portfolio grew by less than was expected at the start of the pandemic, and the percentage of tenants moving out of commercial spaces remained at a manageable minimum.
This rapid pace of change in 2020 is bound to continue its momentum. This year we created a transformation and innovation office within the Company, whose purpose is to help the Company change more rapidly. This transformational change seeks to turn El Puerto de Liverpool into an ecosystem capable of serving customers any time, anywhere. The change begins by strengthening two key areas: Systems and Logistics, which will occupy most of our capex in the coming years. We already have various projects under way to keep merchandise as close to our customers as possible, so that we can deliver it quickly and efficiently, capitalizing on our competitive advantages, like our shops and department stores.
In addition to strengthening our systems and logistics, we will concentrate on improving our omnichannel offering through website improvements, using the agile cell methodology we introduced in 2020, and a better use and analysis of the data we have to tailor each shopper’s experience to their preferences and needs. At the same time, Marketplace, the fastest-growing digital area in 2020, will become a crucial area for the Company’s sales and revenues in coming years, because it will enable us to expand our catalog offering through strategic supply alliances.
Finally, I would like to leave you with the message that although 2020 was a very complex year, one that challenged us in unexpected ways and obliged us to reorder our priorities, it also led us to growth and change. I am convinced that what we learned as an organization this year will make us better at our mission of serving the customer, and that 2020 will be remembered as a watershed year for El Puerto de Liverpool of the future.
Thank you,
Graciano F. Guichard G.
Chief Executive Officer
December 31st, 2020