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The Virtual Market Mom and Pop Shops Reborn Case Solution

Solution Id Length Case Author Case Publisher
2414 1235 Words (5 Pages) Jasenko Ljubica, Miguel Montoya Ivey Publishing : W18267
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Cuevas and Espindola created their firm, the Virtual Market, on a quest to turn the conventional mom-and-pop shops into significant market participants and formidable rivals to superstores. One of the most noteworthy groups in the retail industry was the informal channel, which consisted of conventional, small family-owned companies and accounted for more than three-quarters of Latin America's retail for fast-moving consumer products in 2010. The small-store category was strong due to the social, economic, and cultural demography of the areas as having a big base of BoP and MoP customers. It also offered strong profits for manufacturers that paid higher rates to conventional shops owing to lower order volumes as opposed to major merchants. Both the proprietors and consumers of the traditional mom-and-pop enterprises were mostly individuals from the low-income part of the community. The huge rise of the small-retailer format was driven by restricted earnings capacity of the customers and inadequate development of infrastructure throughout the LAC region, particularly in rural regions. The tienditas were the main retail route serving these populations because of the dual social and commercial ties that existed between store owners and their poor and middle-income customers.

Following questions are answered in this case study solution

  1. Problems and Challenges to traditional retail stores

Case Analysis for The Virtual Market Mom and Pop Shops Reborn Case Solution

While mom-and-pop shops benefited from numerous advantages such as accessibility, convenience, and trust, they also faced three major challenges that threatened their survival: a lack of modern business skills among shop owners, the financial evolution of BoP and MoP consumers, and the emergence of fierce competition. Firstly many shop owners were uneducated and lacked basic business intelligence. It resulted in numerous obstacles in terms of business finances, marketing, stock management and control, planning, and other key business skills in today's environment. In a World Bank survey, more than 50 percent of the owners were revealed to lack business knowledge which put them at a serious disadvantage. They missed out on potential improvements in their business processes through contemporary retail technologies and managerial skills. 

However, as clients got more informed, a difference arose between them and store owners. The customer progression in terms of economic growth, financial inclusion, and the introduction of new technology allowed a huge part of individuals to move from the bottom of the social pyramid to the upper centre of the pyramid. Financial instruments and services such as credit cards, debit cards, cashless transactions, and monthly payments accompanied higher incomes. Furthermore, the disruptive digital financial technologies such as online and mobile platforms, E-commerce, and online banking converted the consumers into more sophisticated and demanding customers who demanded flexibility and diversity in payment methods, cheaper costs, and more variety in items.

The third challenge which the shop owners faced was the rise of strong rivalry in the shape of major retail firms armed with current business expertise and technology. These huge firms began capturing mom-and-pop shops’ market share. They supplied the clients with a broader choice of items at reduced costs via economies of scale for buying and selling. They also gave increased payment options via numerous payment methods.

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