The Crop Inputs retail of the future: The trends that will change the game in the Brazilian market

Date:10-06-2023

Agricultural retail is one of the most vibrant sectors of our economy according to ZMP consultancy, this market is estimated at R$ 350 billion (US$ 70 Billions), with 70% of these numbers occupied by Distributors, Cooperatives and Re Distributors and 30% served directly to farmers in the which we call direct sales. 

This market, often ignored by the general public, and which is much larger than the Pharmacy and household appliances sector in Brazil, just to give an example, is experiencing a unique moment of great transformation. 

As technology advances, farmers become increasingly demanding, connected, and with the desire to be served directly by the industry and because they do not see this retail sector serving them as they wish, several new and growing business models emerge in Brazil. such as Agriacordo, Agriconnection, purchasing pools, among others, seeking a more direct connection between the industry and farmers. 

In addition to the consolidation of the distribution system, the advancement of cooperatives into the cerrado, the increase in digital sales, the entry of new suppliers of chemicals, seeds and specialties, and currently a range of agtechs are also seeking access to this super competitive market in order to offer services before, inside and after the farm gate, remembering that the market for services for agricultural properties is at least 3 times larger than that for crop inputs, a market that needs to be occupied/retaken by these retailers. 

With this entire scenario, these distributors/cooperatives need to reinvent themselves as they will be sailing in previously unexplored seas. 

Today there are some silent trends/revolutions that are shaping the future of agricultural retail and determining who stands out and who is left behind. Some of these trends we have already seen and are seeing occur at the same time in traditional retailers, as explained by Tiago Mello CMO of Linx, in his article for Brazil newspaper that helped me bring this same topic to light in agricultural retail. 

https://braziljournal.com/brands/varejo-do-futuro-6-tendencias-que-vao-mudar-o-jogo/

 

Each of these trends creates a range of interactions, a series of innovations, which paints a completely new panorama, where the farmer is at the center and experience is fundamental to the success of the business. In this scenario, understanding and capitalizing on these transformations is not just a strategy, but the key to survival and success in the world of agricultural retail.

The Unified Commerce:

″When we look at other sectors, we see how much retail has already transformed. 23 years ago, 99% of purchases were made in physical stores, where most product discoveries also took place. A time where corridors were the main stages for news and desires. But retail, like everything, has evolved. 

The multi-channel world has emerged, with brands exploring new horizons and adding channels to increase the convenience of their customers. However, this evolution came with its own set of challenges. 

The Main Issue ? The lack of integration between these channels, creating a fragmented world of shopping experiences. Omnichannel has become the key to contemporary retail, opening doors to unprecedented growth and a superior service experience. It minimized disruption by ensuring e-commerce inventory reflected the brand's full inventory, as well as enabling stores to access this unified inventory. The possibilities didn't stop there. Customers could now buy products online for pickup in store, or even opt for express delivery within 2 hours, taking advantage of the nearest store's stock. There is no doubt that omnichannel has played a crucial role in the growth of retail. However, he is already starting to show signs of maturity.

And when we look to the future? The industry is already looking towards Unified Commerce. The big twist here? While omnichannel is about the brand and its channels, Unified Commerce puts the customer at the center of everything.″

 

In agricultural retail, we are in the early stages of Omnichannel and there will be no time to wait, we need to skip steps and go straight to Unified Commerce. Our target audience is 1% of our population and we need to know much more about this farmer, his behavior, and his purchasing journey. It's not just about where and how to buy, but the complete experience that a brand can offer the customer. We need to quickly integrate a brand's physical structures, our presence in the field and online to create a unique experience, both for our client and for the business. 

Our agronomists, veterinarians, zootechnicians, etc., need to know that the farmer is browsing the website, looking for information in Market Places, on field days, in publications and at agricultural fairs. In this farmer's journey there is a phase called investigation and planning, and it is up to us to find out what he is researching, what he is interested in, how he is planning, and generate actions both online and offline. The Farmer first looks at the solution and does not look at the sales channel, he is initially interested in the formula, the active ingredient, the genetic material and once decided, he will look at the ″brand″ and who represents it. 

Distribution through this unified commerce needs to offer maximum convenience in any situation. Whoever first understands the dynamics and unifies all the steps, with data, agility, relationships and knowledge of the solutions will come out ahead. 

In the same text by Tiago, he portrays ″Proximity Retail: There is a silent change happening on the streets of our cities and neighborhoods: the rediscovery of local retail.

A study by Think with Google (2022) shows that online searches for local businesses have soared by 900% in the last two years. This number portrays consumers' deep desire for authentic connections, relationships that transcend simple commercial transactions. 

Local businesses are not just establishments that sell products, but also meeting points and exchange of experiences. They are places where sellers know your name, where every purchase has a story and where every penny spent is reflected in the local economy, supporting jobs, families and dreams.″ 

In agricultural retail it is occurring at a much greater speed. In the desire for consolidation, large retailers and cooperatives are migrating to regions they do not know, believing that the fact that they are large, with greater purchasing power and more complete offers would seduce farmers. And what are we seeing? The Growth of local networks that focused on relationships, technical assistance, and more transparent negotiations. This reinforces the growth of so-called purchasing pools, where an agronomist or a network of professionals understood the farmer's need for trust and convenience and definitively took the place of the distributor. 

It's easy to understand how groups like Fenix, Gapes and Paulo Assunção have grown dramatically in recent years and opens a huge opportunity for territory to be occupied by more specialized chains that sell more sophisticated products and exclusive services. 

Another point that resembles traditional agricultural retail is the Media.

                

Advertising, at its core, has always been about capturing attention. Some revolutions have redefined the way brands communicate with their audiences. The first of them came through ads with Google's search engines. Then, social networks like Facebook, Instagram and TikTok. Now we have the next big wave with retail media. The concept behind retail media is simple yet powerful. 

By capitalizing on space, whether physical or digital, retailers not only sell products, but they also sell attention, sell brand experiences. Agricultural Retail is quickly adopting this format and as an example.

 

I like the  Nutrien and Atua Agro examples in Brazil, who in my opinion  are at the forefront of this process with their experience stores and the perfect synergy between brand and farmer, and reinforcing the thesis of no limiting itself only to the physical, but also investing in digital, with agile communication, and full of information. 

Strategic partnerships are essential in this media format. It's a symbiosis, in which both benefit: brands gain direct visibility, while retailers enrich the farmer's experience in their stores, whether physical or virtual. If on the one hand in traditional retail we have the creative economy, in agriculture we are having this same phenomenon that is ″The Agro Influencers″. 

Fueled by the growth of social media, influencers and content creators are not just amplified voices on the internet, they are facilitators, and several brands such as Syngenta, Bayer, UPl and others are using these figures to get closer to their target audience. But the question remains: How can retailers capitalize on this growing wave, this trend, the so-called creative economy? 

″First, it is essential to recognize the importance of engagement. The era of the Product Page (PDP) – simple descriptions and a static image – is giving way to the Product Experience Page (PXP). These PXP’s are rich, interactive and comprehensive, offering a series of information that seeks to inform and delight the customer.″

   

Agricultural retailers who want to thrive in the digital era must not just passively observe this change, nor just industry initiatives, but rather become active participants, providing platforms and experiences that reflect authenticity and engagement. In this regard, the best example I know is that COAMO, the largest cooperative in Brazil, which manages to talk to all its stakeholders, and members to live a unique experience, whether in their physical field days, or in the use of their digital applications and in constant conversation with this new range of influencers.

The Use of Data and Artificial Intelligence. Another point where I see many similarities in Tiago's opinion ,with Agricultural Retail is about personalization for the consumer, and it is certainly a fundamental pillar.

The use of data, algorithms and artificial intelligence is poised to transform not only the way we interact with consumers, but also how retailers operate and make strategic decisions.

 

One of the challenges faced by agricultural retailers is the crop input purchasing process. Deciding what, when and in what quantity to buy has always been a combination of art and science. Using historical data and algorithms, it is possible to analyze purchasing patterns, market trends and seasonality, which help in decision-making with maximum precision. Some Crop chemical companies, such as Ourofino AgroSciences, already use this information to better manage their factory and operations, but it is necessary for retailers to do this as quickly as possible, otherwise they will always be held hostage by distribution policies, rebates and ″PUSHS″ of the industry.

 It will also be necessary to invest in store management, which was one of my main headaches when I was CEO of a large agricultural retailer. Imagine that when detecting certain patterns or irregularities, artificial intelligence not only alerts the manager, but also automatically initiates strategies, optimizing operations and correcting problems before they become critical. And our Agronomists? Far from replacing them. With a range of data-based tools, our agronomists will be able to better understand customers' needs, preferences and histories, offering a more personalized and effective service, moving completely from transactional sales to consultative sales. By knowing the data, we will be true recommenders and not simply sellers.

 It's worth looking at a startup from Ponta Grossa called For Farmer innovation. Data capture, supplier management, marketing, they offer information to your entire network of agronomists so that the data is converted into leads, and these leads are converted into sales.

In the world of marketing, data intelligence promises never-before-seen optimization. Instead of the traditional approach, the use of data will allow greater assertiveness of campaigns, the moment of purchase, the purchase profile and combining the farmer's needs with the ideal moment to purchase goods and services. This will not only optimize your media spend, but also ensure that every penny you spend on advertising has the biggest impact possible.

 ″Connection through purpose″: ″For decades, the corporate world has been driven almost exclusively by profits. But times are changing. Today's customers, driven primarily by Gen Z, are redefining what they expect from brands. They don't just want a product or service. They want an experience that aligns with their personal values. However, a worrying disconnect arises here: according to the Purpose Index from consultancy Korn Ferrys, only 7% of CEOs can define what the purpose of their companies is. Sounds alarming, doesn't it? But why is this so important? 

Some data: McKinsey & Company highlights that 70% of Gen Z consumers seek products from ethical companies. The Boston Consulting Group reports that 62% are willing to pay more for products from companies that align with their values. Nielsen points out that more than half of Gen Z consumers prefer brands committed to sustainability. Now, think about this: how does your brand communicate? Does it reflect a clear and genuine purpose? If you think ″purpose″ is just a buzzword, the data suggests otherwise. Having a clear purpose is not just a marketing strategy, it is an essential premise for success in an increasingly conscious market. So, as you evaluate the future of retail and consider the trends that are shaping the industry, ask yourself one question: ″What is the purpose of my brand?″

Sometimes we may think that Tiago's statement is far from our agricultural world, but it is worth highlighting that the Brazilian farmer is increasingly younger and soon this generation Z will be the one that will command Brazilian agribusiness, understanding these trends will help us industries and retail to a better combination of Purpose, Mission and Values. 

What I recommend here is more caution when communicating with this audience, and that the purpose of your brand, understands the values of our farmers and ranchers. Trying to forcefully set an agenda can be a real trap.

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If you would like to share your company's story. Please contact Christina Xie at christina@agropages.com