Strategic Business Administration

Homework Nº: 2

Title: PESTEL and SWOT Analysis of Freshmart

Group Nº 5

Student Participation
(Yes/No)

1. Brenda Alessandra Cueva Velarde Yes

2. Miguel Angel Delgado Pocco Yes

3. Kiara Vanessa Pio Fernández Yes

4. Adriana Patricia Uyene Gushiken Yes

customer.

Part 1: PESTEL Analysis

Political: One of the worst challenges for Peru is political instability. During this past year,

the current president, Dina Boluarte, has faced protests and demonstrations against her

government, as a significant portion of the country wants new presidential elections. All of

this weakens the democratic system, which, with Dina in charge, could still be in a significant

state of stagnation.

https://cnnespanol.cnn.com/2023/07/27/como-ha-sido-el-gobierno-de-dina-boluarte-orix/

Economic: The Peruvian economy has been affected by the El Niño phenomenon, and until

now, nobody has determined whether it is mild or moderate. Nevertheless, the President of

the Central Reserve Bank, Julio Velarde, has already communicated that a negative impact

of 0.6% on the GDP might happen, and economic growth projection is the decrease from

2.6% to 2.2%. This problem affects supermarkets because some products they used to buy

for resale now cost much more than they did a few months ago. A clear example is the price

of lemons, which has reached up to 15 soles per kilogram.

https://rpp.pe/economia/economia/bcr-que-impacto-tendria-el-fenomeno-el-nino-noticia-

1490700?ref=rpp

https://larepublica.pe/economia/2023/08/28/por-que-subio-el-precio-del-limon-en-el-peru-

cuanto-esta-el-kilo-de-limon-en-peru-por-que-el-limon-esta-caro-lrnd-2590952

Social: With the arrival of the pandemic, the population began to trust online shopping, and

this became a habit, thus benefiting the company in such a way that people now make their

purchases with total normality both virtually and in person.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9379614/

Technological: The presence of the technology sector is of utmost importance, as it allows

the establishment of relationships with the target audience through websites and social

networks as a means of communication and advertising. For example, most modern

and more practical for companies and customers.

https://fastercapital.com/content/The-importance-of-technology-development-in-

startups.html#:~:text=Technology%20advancements%20allow%20startups%20to,strategies

%2C%20and%20scale%20their%20operations.

Environment: Nowadays, supermarkets are increasingly committed to the environment. For

this reason, a significant portion of this sector chooses to refrain from providing plastic bags

when delivering their products. Instead, they offer biodegradable or paper bags, thus

avoiding pollution and the ongoing plastic waste in the city.

https://sial.minam.gob.pe/huallaga/novedades/ministra-ambiente-2021-ya-no-se-usaran-

bolsas-plastico-primer-uso#:~:text=Buscar-, Ministra%20del%20Ambiente%3A

%20%22Desde%20el%202021%20ya%20no%20se%20usar%C3%A1n,de%20pl

%C3%A1stico%20de%20primer%20uso%22

Legal: Formal companies must recognize the Value Added Tax Law (IGV). Therefore, they

must respect it. It currently represents 18% of the total amount of sales. It is equally

important to keep in mind the Minimum Wage Law. This cost must be included in the salary

expense and evaluated based on the number of employees hired. This factor also takes into

account consumer protection law and product liability.

https://emprender.sunat.gob.pe/tributando/declaro-pago/impuesto-general-las-ventas

Part 2: SWOT Analysis

STRENGTHS

● Quality and variety of products: Even in its name, it says that Freshmart

guarantees to offer fresh products, as they do not sit on shelves, and there are fewer

intermediaries on average. Not only that, but it also provides variety, as they have

more than 7000 products across 14 categories. In addition, their products are more

natural and organic than supermarkets. Finally, Freshmart presents products

correctly, cleanly, and hygienically.

customer satisfaction. Consequently, they employ strategies that set them apart from

other supermarkets. For instance, if any product is not in the order, the company is

committed to delivering it without an additional shipping cost, which shows

Freshmart's commitment to market quality and fostering a consistent purchasing

routine.

● Better experiences with Club Fresh: Freshmart has a new loyalty program called

Club Fresh, featuring exclusive offers, promotions, discounts, and surprises for its

members. They even give away a free shipping coupon and S/ 40 as a gift for your

first purchase.

● Exceptional shipping service: Freshmart delivers products to customers' houses

without extra service fees.

WEAKNESSES

● To be a medium-sized company: Freshmart in the online market industry is widely

recognized, and despite experiencing significant growth in recent years, it continues

to operate as a medium-sized company, which hinders it from being able to offer

lower prices like Tottus or Plaza Vea, resulting in a smaller profit margin.

● Website with lack of development: While it has the advantage of being intuitive,

sometimes, when you want to use a coupon on the website, it tells you there is an

issue, and they will resolve the problem immediately. However, this takes a long time

and is not feasible for people who need to make immediate purchases.

OPPORTUNITIES

● Jüsto, a Mexican company, acquires Freshmart: This favored having significant

financial support and brought great advantage for their geographic growth. According

to the newspaper Gestión (2021), "this acquisition - as indicated - is expected to

accelerate the growth of the Peruvian startup and consolidate it as the leader in the

sector in the market in the coming years."

channel: Providers have a significant role because of their level of negotiation. That

is why they can benefit from it by having a better rotation of products to avoid

throwing out the merchandising.

● Higher power of negotiation with consumers: Understanding that clients from

medium-high and high socioeconomic sectors are demanding, the market has a

higher negotiation power by the customers. It proposes that the products that have

the best quality and the best price should count for distribution.

THREATS

● E-commerce companies: There is a lot of competition in the market. Some use the

same system as Freshmart, such as Doña María, Fresh Market, Go Fresh, and Favo.

Others focus solely on delivery, like Cornershop, Rappi, and Joker. These latter ones

compete with their famous tiered discounts and promotional codes.

● Supermarkets: Tottus, Wong, and Plaza Vea are their main competitors. They have

a more developed e-commerce version and numerous physical stores. Their

sometimes unbeatable offers pose a significant threat.

● Increased number of small convenience stores (bodegas): With more of these,

customers would find it easier to shop and may not prioritize Freshmart. They might

prefer to shop near their homes instead of waiting for their orders or having to pick

them up at the store.

● Vulnerable products: Expiration dates and the possibility of products not arriving in

good condition are beyond Freshmart's control and negatively impact sales.