Micro, small and medium enterprises: resilient to COVID -19

CatalystMicro, small and medium enterprises: resilient to COVID -19

Micro, small and medium enterprises: resilient to COVID -19

Micro, small and medium enterprises: resilient to COVID -19

By: Jorge Martínez, Service Designer FUNDES Catalyst and Rafael Enrique Gómez Elías.
2021

In Mexico City, there are 338 shopping centers and department stores that house in their ranks thousands of small and medium enterprises that day after day trying to serve millions of Mexican consumers. Today, following the recommendations of health authorities, these consumers stay at home while these SMEs remain closed.

The crisis has changed the way. We do not know how long it will last or what impact it will have on physical stores, but expectations are not encouraging. Add to this the fact that only 19% of Mexico’s 227,985 SMEs (not counting microenterprises) market their products and services online, and we see that only one-fifth of them have alternatives to survive in the short term.

 

CONNECTION TO SURVIVE AND SURVIVAL

Mexican SMEs employ 31% of the economically active population (EAP). In other words, under current conditions, 25% of these EAPs are at risk of becoming unemployed in the short term, but what did they think, that SMEs would stand idly by?

In Mexico, 9 out of 10 shoppers are omnichannel, meaning they interact through digital and physical sales channels. The current situation offers a huge opportunity for hundreds of thousands of SMEs to update their business models and bring their products to more retail spaces, where they have the opportunity to take their products and services to other states and countries, expanding their market like never before. 

Digital channels are the alternative available to MSMEs to weather this crisis, but also to survive in the long term once the storm has passed. Today’s crisis is an opportunity for tomorrow’s SMEs to be ready to market to customers in every corner of Mexico and the world.

LET US NOT FORGET THE “CHANGARRO”…

Remember when you used to go to the changarros around the corner to buy tortillas or lemonade? Yes, the same changarros served by millions of Mexicans who made their own way home or to a local eatery near their home, the same changarros that have suffered from the advent of convenience stores and supermarkets. So I can tell you that the changarros are more alive than ever and that the informality with which most of them move allows them to be the safest front for millions of Mexicans who stay at home to get basic necessities without having to travel long distances by car or on foot.

According to a survey conducted in recent weeks by FUNDES, a consulting firm specializing in MSMEs and value chains in Latin America, 88% of Mexican grocery stores are still open, and 87% report that suppliers continue to deliver products on time. Nevertheless, we must keep in mind that the vast majority of changarros are not ready for digital transformation. Only 30% of stores that participated in this survey report that they are able to take virtual orders, while only 12% are able to receive card payments. With this in mind, many stores will be forced to make this digital transition in order to remain relevant and competitive, without diminishing the value they offer to the millions of Mexican consumers who are staying home during these tough weeks.

This crisis will allow us to remember the importance of the changarro in the national economy, not only as our reliable supplier, but also as the friend that never left, but that we sometimes forget because the context forces us to do so. In times of startups, unicorns, and “too big to fail” companies, we should not forget that the changarro, the artisans, the farmers… are and will always be the origin of the first entrepreneurs in Mexico.

Sources: INEGI, Mexican Association of Online Sales.

About FUNDES

FUNDES Latin America is a consulting firm with more than 35 years of experience in developing MSMEs and their successful integration into the value chain of large corporations. FUNDES has worked with more than 100 multinational companies, with more than 30 governments, development agencies, and foundations, and has implemented projects in 17 Latin American countries that have impacted and transformed the lives of more than one million micro, small and medium enterprises, with value co-creation programs and innovative and competitive solutions to the main challenges of the sector. 

Business Units:
  • FUNDES Consulting

Dedicated to developing business services that support the strategy of corporations, foundations, and governments seeking to integrate small businesses into the traditional economy. FUNDES Consulting’s offering targets the Business segment, which provides in-depth knowledge of large companies’ MSME partners and enables the development of interventions that increase business results and impact the sector. And the Impact segment aims to promote impact initiatives that leave a mark in the environment in which they are located.

  • FUNDES Catalyst

Dedicated to promoting micro-entrepreneurs who are otherwise excluded from innovative services in Latin America’s traditional markets. Latin America’s traditional marketplaces are excluded. We develop, launch and operate innovative solutions and start-ups to solve the fundamental business problems of micro and small enterprises, which are typically family-owned and represent 98% of all businesses in the region.

Contact:
internacional@fundes.org

Fiorella Blanco,

Director of FUNDES Consulting

Corentin Larue,

Director of FUNDES Catalyst

Drag View

ELEVATE YOUR BUSINESS WITH

Valiance theme

Limitless customization options & Elementor compatibility let anyone create a beautiful website with Valiance.