Salta’s Anatomy

By Ana María Lazareff

M.A. Candidate, 2012

If Labor Day is celebrated on May 1st in Peru, when is it okay to start wearing white?

At times it feels as if us Salta interns should be wearing lab coats to the meetings with our clients. After all, our ultimate responsibility is to diagnose, prescribe and await the results of our recommendations, hoping that we have been successful in improving our client’s social and economic health. Accordingly, cash flow statements become their business’ vital stats – the very lifelines that we will monitor closely throughout our three meetings.

Client: María Elena, owner of a bodega/bazaar

Bodegas are essentially convenience stores stocked with water, sodas, chips, candy, etc. Just know that “etc.” can mean anything from shampoo and laundry detergent to leggings, photo frames, perfume and/or a Jenga set. They have proven to be one of the more challenging businesses to consult as low barriers to entry facilitate competition; practically every block has its own bodega. At the same time, the prices of the products sold are dictated by suppliers and marked distinctly on the packaging. Bodega owners are forced to sell at the designated price and achieve minimal profit margins as a result. To overcome these restraints, differentiation and innovation are key. Unfortunately, they are not sold inside.

Diagnosis: lack of clients and low profit margins

The first meeting precedes the “check-up”. Without a record of their actual finances, our clients are typically unprepared to discuss exact numbers and figures. 

During our first meeting, I ask María Elena to start writing down her daily inflow and outflow of cash. We discuss her current business and future expansion goals, mapping out a budget for necessary purchases: another display case, a set of computers to operate as a locutorio, a roof for her house. This last goal alone would require $7,000.

Looking over the numbers together the following week we note that her daily net income averages $7. Albeit the store’s location on a decently transited street, only about ten people stop inside on any given day. There are no signs on the storefront which is everything but convenient.

Prescription: a dose of marketing, creativity and a deep fryer.

During this second meeting, I learn how María Elena loves to cook and had once envisioned the bodega as small food café. She had previously prepared and sold several Peruvian staples such as arroz con leche, picarones, pan con chorizo, and mazamorra. María Elena, you had me at “arroz con leche”. I suppose not too many doctors prescribe fried donuts to remedy their patient’s ailments, but it was either that or more cowbell. I ask María Elena to spend the coming weekend selling picarones. We work out a pricing strategy based on the costs to produce these platos and develop a marketing plan to attract more customers.

Result:

I could spot María Elena’s bodega from the corner. A giant, vibrant pink sign in the shape of a star read “PICARONES” and several others covered the two doors. “I made $40 on Sunday!” she announced proudly as I walked inside. In a single afternoon she had made more than she previously earned in a week. Her happiness was contagious as she recounted how she had even ran out of the dessert. New customers had stopped by and she had been able to practice her cross-selling skills which we had worked on the previous meeting. Offering promociones and combos she was able to sell more of her products. Why not chase down that plate of sweet potato donuts with some Inka Kola or chicha morada?

María Elena now offers picarones on Tuesday, Thursday and Sunday. Saturdays are for pan con chorizo and arroz con lecheCaldo de gallina is available most weekdays – you will need to look at the new blackboard outside her bodega announcing that week’s menu. Should you find yourself in Lima at the end of next year with a craving for Peruvian desserts and a Jenga set look no further than the brightly decorated bodega on Avenida Vista Alegre, the one next to the newly roofed house.