El Puerto de Liverpool, S.A.B. de C.V. (BMV:LIVEPOLC1)

Investor Day 2021

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Apr 28, 2021

Good morning. My name is Emma and I will be your conference operator. All lines have been placed on mute to prevent any background noise. Welcome to the 1st Liverpool Day. There will be a question and answer session after the presentation. Instructions will be given at that time. Any forward looking statements made during this presentation are based on information that is currently available. They are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in El Puerto de Liverpool's most recent annual report. Please refer to the disclaimer on the web page for guidance on this matter. I would now like to turn your attention to a brief introductory video. Hello, everyone. Thank you for coming to our first ever Liverpool Investor Day. We as a team are very excited to host it. Today, we're going to talk about what we usually thought that are the results of the first [SPEAKER MARCO TRONCHETTI PROVERA:] That we published yesterday. But I want to just give you a brief recap, a brief summary. Our stores, as you probably know, [SPEAKER MARCO TRONCHETTI PROVERA:] We're closed January and half of February, but March was pretty strong. Our net profit for March was More than twice the one we had on March 2019. That's 2019 because it was the last year Of a correct comparison. Although it was not enough to offset the results of being closed January February, We feel very confident on the rest of the year because of the results on March. So we're just talking about results today. [SPEAKER JOSE ANTONIO ALVAREZ PALLETE:] We're going to spend our time talking with you about 2 subjects. The first is what we are trying to build as a company, which [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] We've called it an omnichannel ecosystem. We want to build an ecosystem leveraged on our main strengths. The main focus of this ecosystem is to serve our customers in many different aspects of their lives. That presentation is going to be led by Mauricio Bragerman, who is Head of our newly formed [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Office of Innovation and Transformation. And then the second part of this presentation, we're going to talk to you about La Goya delivered our footprint. As a company, I believe our actions last year spoke louder than our words. We are very We're trying to make a statement that Liverpool not only focuses on shareholders' return, it's one of our main focuses, [SPEAKER MARCO TRONCHETTI PROVERA:] But also, we like to focus on the impact we have as a company with several other stakeholders, with close to the employees, with vendors and [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] With society in Mexico as in general, if we want to live here we want to live as a company for another 170 years, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] We need to address those issues more than ever today. So that presentation is going to be led by Saje Edid, our Head of HR. And after that, we're going to open the floor for Q and A. So with that, if you could show me the next slide, please. This we were going to you're going to see different people that you usually don't see apart from Enrique, you don't see that often So I'm going to start with Sayer and make my way around. Sayer is our Chief HR Officer. She's been with us a long time. A big part of her career was done on the purchasing office. And Torino Visceral, he's our Chief Digital Officer. He's been on that position for several years. He was also on the purchasing office and on the stores. Edwin Sermit, I think of all of us, he is the one that has served The most time here in Liverpool, he started on operations. He was manager of the purchasing office and now he's in charge of logistics. Gerardo Munoz is our recently named Chief Information Officer, which we now change the Titled to Chief Technology Officer. Enrique Mujosa, you all know, he's our CFO. Santiago de Abiega, [SPEAKER MARCO TRONCHETTI PROVERA:] He's been with us a long, long time as well. He's in charge of all the financial services and he was also in charge of the purchasing office. And as I said, Mauricio Brabuelos, who is going to start this presentation, is our Chief Transformation and Innovation Officer. With that, I'm going to leave you with Mauricio. Thank you very much for being here with us today. Well, good morning, everybody. It's a pleasure to be here with you. Pauline, if you can skip to the next slide, please. So basically, a couple of years ago, we started exploring the concept of ecosystems. We started exploring that primarily in the Asia Pacific region. And after seeing all the innovations in retail, in financial services and in other Areas that we saw in Asia Pacific, we were really inspired, and it gave us a north in terms of how these industries were evolving over time. Our intention has been and continues to be to find better ways to serve our customers, find more synergies between our business units And also find ways to complement our offering. Last year clearly was a turning point, an inflection point, and it clearly accelerated Our thinking and our efforts in this regard. Today, as a team, we want to share with you our vision and particularly our new ecosystem strategy Pauline, if you can skip to the next one, please. Throughout our history, we have gained our customers' preference by having the right assortment, by providing it at the right value, By providing it with great service and also by having great locations. As they typically say, it's locations, locations, locations. But one can argue that the definition of location has expanded in the last few years. And now we believe that location also includes Being in our customers' smartphones, particularly in the first string of our customers' smartphones. And this ecosystem strategy is a combination of efforts that we want and we believe will help us To be in this great location as well. If we go to the next slide, please. To better serve our customers, we need not only to be a destination, but we also have to become a stronger platform, A stronger platform that provides service not only to our customers, but also to our great partners. We believe that we start from a great starting point, a great place. From the customer perspective, I think we're pretty strong in gaining our customers' trust with great brands, providing great value. We also believe that the times have changed, and now we need to provide even greater assortment. And we also believe that we need to continue improving our great omni channel experience for our customers. On the partner side, Meaning our sellers, our vendors and others, we believe we have been great partners Building great win win relationships with our partners throughout our history. But now we also We need to provide a great platform for them, and we need to make it easier for them to join and benefit from our platform. We believe that if we do that, We will continue building on this virtuous cycle or the so called flywheel that hopefully will continue powering our ecosystem. Now if we can go to the next slide, please. With this, clearly, our Customers have changed. Clearly, the competition has changed, and we need to continue evolving as well. But in order to serve better and compete better in this new world. We believe we have to do it leveraging our key strengths that we have built throughout our history. And let me perhaps summarize what we believe are the 5 most important strengths. First, it's our brand. We have The most recognized brands in the categories in most of the categories that we compete in, and that's clearly a strength that we need to leverage And continue leveraging. 2nd, we have a very, very strong loyal customer base. We have over 12,000,000 traceable unique customers. And in those customers, we know their preferences. We know what products they want to buy, where they want to shop. And in half of those customers, Which tend to be typically our financial services customers, the customers that have our own credit cards. We don't only know that information, but we also know Part of their credit history, their capacity to pay and in many cases, typically what they even purchase outside of our ecosystem. And obviously, we have gained great NPS or Net Promoter Scores with those customers as well. The third one is leveraging our great financial services business. We in the last few months years, we have become perhaps now the largest credit card issuer in the country. Almost half of our sales are done with our own credit cards, creating a virtuous cycle. And we have been able to position what we call A great subscription services that is called the PIP, which is basically a monthly subscription where today For basically around MXN 100 per month, we provide life insurance, we provide assistance services. And recently, we even provide extended warranty in the purchases done in our at our stores. And in this monthly subscription, it's something that Has penetrated a significant part of our cardholder base, and we believe that we can continue evolving that asset in the future with other services that could be valued for our customers. 4th is our footprint. We clearly have An extensive footprint of more than 400 points of sale plus our shopping centers. And we believe that Those locations, in addition to the great people that work in them, provide us a great asset and a great Strength that we need to leverage as we move forward. And finally, we have built and partnered with great brands. We have a great assortment of brands in most of our categories. We have great private labels, and we also have great exclusive brands That our customers really value and that we want to leverage moving forward. If we go to the next one, please. So this is basically kind of our 1 pager strategy, and we will try to explain it throughout the presentation. 1st, starting with the ambition at the top. We really want El Puerto deliverer pool to be part of your life, as our slogan says. We want to become the 1st shopping option for the Mexican shopper. And we have developed 3 concrete objectives in the next few years. 1, we want to continue growing on e commerce in the next few years and close the gap with the digital competitors. 2nd, we want to really become the undisputed leader as an omnichannel player. We believe that our strengths enable us to do that. And finally, we want to create more differentiated and sticky experiences. Today, we Transact or interact with our customers a few times per year. Typically, our cardholders interact with us more significantly than the non cardholders. But we believe that by doing a series of initiatives that we will explain further, we can significantly increase the number of interactions that we have with our Customers and clearly become part of their life become part of their daily life, which is something that we want to aspire. To do that, we have developed several strategies and several key initiatives. We have articulated some key enablers that we will explain and also Some key commercial initiatives that we will explain throughout the presentation. But let Let me start primarily and firstly with the enablers. We want to start primarily with the IT and the transformation of our technology office. As Graciano mentioned, Gerardo Munoz, starting since this January, has become our new CIO reporting directly to Graciano, And he will jump start by talking about the transformation of our IT department. Gerardo, please move forward. Thank you, Mauricio. Good morning, everyone. Nice to be here with you. As Mauricio mentioned, I To cover the responsibility for the information department. So please, next slide. Technology is a key enabler, right? For the ecosystem strategy, we need to Make sure that we deliver the value that is expected for the business. So during the next few minutes, I'll share with you what we are going to do To evolve our tech capabilities. Next slide, please. Well, to part our evolution journey, we are started with a very simple question. Why do we need to change? To say that the business has changed has never been so true as it is right now. Technology transformation most The pace of the business evolution to really deliver value. Also, technology is now far away to be a support function. Over the years, it actually became a key business enabler. We are in the need of a simple and nimble technology landscape That allows the business not just to go faster, but to leverage more on the current IT assets and the assets we will build in the future. And last but not least, technology is not expected to be way more than an enabler for the business. It must become a competitive advantage To differentiate from the competition. Next slide, please. Our technology evolution has 7 guiding principles. First one is Customer in the center. This is the Liverpool way and Liverpool cannot be the exception. And when we are talking about customer, it's a customer that is Either in our stores, buying online, using one of our credit cards in whatever part in the world Or going to a mall, that it doesn't matter. That's our customer and that has to be our focus like the Liverpool way is. For that, we need to do a really, really strong partnership with the business, working to understand its strategy and together make it happen. The third one is agility to reduce time to deliver solutions while keeping things simple. Also, we need to have our holistic thinking to build solutions that could be deployed for El Puerta and Liverpool. Business is Very, very relevant and bringing an ever growing value to the business should be a key focus for us. And last, They deliver technology with a purpose. This means focus on a problem to be solved, not in the technology. We are not going to deploy technology just because It's fancier because it's the last thing that came to the market. We are going to use technology because it solves a Where to start? Well, at the initial step in our tech evolution journey, we are working to enhance resilience For critical applications and infrastructure. Also, our technical and security standards are being modernized and strengthened, And our engineering and third party solutions deployment processes will be improved. Then we need To speed up and scale, the adoption of new ways of working is more relevant than ever now As well as improved collaboration and co creation with our business partners. This is part of having a purpose for technology. We are working to increase the level of maturity of key technical capabilities as well and also reinforce talent in the strategic areas. We are very intentional on how to balance our internal capabilities complemented with the strategic partnerships. Architecture is also a fundamental pillar to our tech evolution strategy. So we are working to build a future architecture Aligned to the updated business capabilities. Next slide, please. Well, our transformation journey is encompassed in 3 tracks: people, process and technology. People is a key element to any transformation. That's fair to say. Culture and mindset are first, everything else follows. So we engage skilled people we need engaged and skilled people that will support our evolution in the long run. We are aiming to provide a great professional challenge, career options for our technical team and the tools to succeed in a diverse environment That fosters collaboration, innovations and a sense of purpose. In regards to processes, We are mainly working in the adoption of our new IT operating model, designing the future architecture based on 4 principles: Flexibility, scalability, resilience and security. Also, we are scaling up and accelerating the adoption of methodologies like Agile, DevOps, and we are working to redefine our sourcing strategies to get the most from our strategic partners. Cybersecurity is more than ever a matter that we need to address. In this transformation, we are also updating our operational model. And finally, on the technology track, We are working hard to assess our current application portfolio, ensuring stability and resilience for our most critical services. We have started a tech modernization program that will not just make advantage of the latest technologies, but also will facilitate the further evolution of our Also, it is very important to keep a very simple landscape. So we have started a full review of our tech footprint To find opportunities to make it simple. All of that will be encompassed within our 7 guiding principles that I mentioned before: Customer in the center, IT as a business partner, agility, simplicity, holistic thinking, ever growing value to the business and technology with a purpose. That's what I wanted to share with you. Now I turn it over to Antoni Novichard. Thank you very much. Hi, everyone. Good morning. Hope everyone is doing great. So I'm going to talk to you about our omni channel digital If we can go to the next slide please. To begin with, let's talk of our transformation goal and let's talk about data. Next slide please. So as mentioned in previous presentations, we have tons of data And we are currently focusing on hyper personalization. And what does that mean? Hyper personalization is being for Each customer there whenever they want to on the decision of purchasing options that they want to and help them To get their goals in the simplest way they can. What is our main goal in this personalization strategy is to know at least 90% of our customers. How are we going to do that? And that's 90% of omni channel customers. We've implemented a few strategies that have helped us Gain this personalization and this information about our customers. 1 is Easy Wallet that was launched a while ago. We also are launching our digital Monadero Electronica, which is another way to overcome that 17% of customers that currently pay in cash. We also have the digital purchasing ticket. So now through our digital systems, you will be able to have all the information of everything you've bought. Even if it's online or offline, you have it on your cell phone. You also we have a lot of Customer data update. We're doing a lot of strategies to update our customers' database. Some of our customers are very loyal and have been with us for quite a while, But their data hasn't been changed and we need to update all of those data. So our main goal as mentioned before is to be 90% Knowing all of our customers and especially focus also on the non traceable payments, there are ways that we can also do that and get better Customer knowledge. And that will take us to the next slide, which is all this information is also to get the customer life We've implemented in the past few months a formula with more than 240 variables to calculate our customer lifetime value. So what is our goal here? Our goal is to keep our loyal customers, but also to increase all our customers into the To become a higher top tier customer. Right now around 60% of our customers are in a standard deviation and those customers It's our goal to put them into higher top customers. Our negative customers, it's a we're proud to say that it's only 3% of our customer data Customer data platform and we're pushing those into low end standard with unique incentives. What are the incentives we have? Well, we have a pretty big omnichannel footprint. So with our financial services, we're focusing on new credit cards And new opportunities for those who don't have it. We have a lot of our mid channel customers. How can we build the digital and the physical world and bring them together? There's a lot of repurchase strategies that were implemented 1 by 1. And also there's a lot of products per order and things we can incentivize To get our customers' lifetime value even high. That's what we are right now talking about data. Now I will turn it into Edwin Selman, which is I talk to you a little bit more about logistics? [SPEAKER JOSE RAFAEL FERNANDEZ:] Good morning, everybody. So we're going to see how logistics And the supply chain will support this strategy. So we can change to the next slide, please. As this was mentioned, this is a very ambitious strategy, and we are one of the key enablers coupled with this. So you can change, please. Our clients have evolved on their buying preferences. Reducing traffic in the stores increased the digital experience of our customers. Reliability It's key in their buying decision and their willingness to receive the product faster has increased. We also see that when the lockdowns are over, the customers are returning to the stores to do their shopping. So I want to show you these figures where in the past 12 months, the last mile delivery group 4 times We're shipping all the purchase orders directly from the stores to the client's phone. That growth was 36. It is faster and it is at a lower cost to serve the customer this way. For these reasons, our logistic networks is focusing on processes, Technology and all the people that is involved in this multifunctional process in order to guarantee the fulfillment to all of our clients. Through improvements in the planning and distribution of our assortments, is it possible to have inventory in the store that is closer To the client, where is the real demand. We also see that Data modeling and using advanced analytics, we will have the ability To make appropriate decisions in order to meet the needs of our clients in the most efficient in a very cost efficient way. Paulina, can we move to the next slide, please? We're building the backbone that supports our omni channel model. We have a unified commerce view and we have streamlined our sales and digits process. All of our sales associates realize e store sales with available products at the stores, but also they can realize sales From the Elis aisle from our extended catalog. We are focusing also that also our of our associates can pick and pack the products That our customers are buying online. And now we are scaling a program where our store associates can also do last mile delivery from stores. The objective of our logistic network transformation is to leverage our stores in a single logistic network. In order to be able to fulfill from the stores and agile replenishment process is required, Our future logistic network will have national as well as regional centralized inventory capabilities. This will allow us to be faster in order to replenish the stores whenever they are delivering immediately to the customers. We can serve also all of our customers shopping orders. Almost 90% of those orders will be delivered in one day and above 80% of the replenishment orders To the stores will also be delivered in one day. Having an inventory assortment according to the demand It's a key success, and I will address this further. Obviously, the corner store of our supply chain will decline will be planned And it's linked with 7 omni channel fulfillment center. That will have that will let us have a very agile and flexible Logistic network plan will have a high inbound capacity And it will have a high scale centralized inventory also capability. It will also have fulfillment central capabilities that will So it was delivered when it's peak season anywhere, so we can deliver directly from the stores. If we want to avoid bottlenecks During the fixed season, we can do it from a fulfillment center if those are past seller items. But we will have the whole product of assortment also with a centralized inventory plan, and we can obviously fulfill from there to the customers With the lead time side already mentioned. Also having the consolidation of big ticket and soft line categories We'll allow the long haul transportation to be more efficient due to the consolidation of those shipping methods. So now let's have a quick look of plan. So, Paulina, can we move to the next slide, please? Innovation is in our DNA. For this reason, we are looking forward to setting the basis in standards that allows to provide the best in class Service to our clients for the coming years. That's why we started the transformation of our supply chain with the construction of or plan, one of our most ambitious and biggest projects to date. With more than 400 stores and boutiques and our millions of digital customers across the country, enabling us to continue delivering a great service In the next years, a Puerto de Liverpool will invest more than MXN 25,000,000 in the development of That will be one of the biggest logistics centers in Latin America. The whole project will have 6 warehouses, Of which, 2 will be the main ones, 1 for Big Ticket and White Goods and 1 for sub line merchandise. Just the big ticket warehouse has an area over 227,000 square meters, the equivalent to 3 Azteca Stadiums In its story, more than 900,000 products have big dimensions. The 3 main characteristics of plan Our flexibility, scalability and sustainability. Also, it has highly automated processes and a nationwide Coverage provided by its location in a very important logistic point in the state of Mexico. The intersection of the Mexico, Laredo and Projects like this could not be completed without great sustainability features. That's why plan has 3 key priorities, Thank you, Paul. It's really exciting despite I'm willing to turn to narrate this hub from scenario. So Continuing with the presentation, our talent and infrastructure strategy integrates with our technology strategy. We have 3 technology projects that are enablers in the supply chain transformation: Planning, Assortment and Allocation, Order Management and Transportation Management. Following the next slide, please. Here we have the highlights of these 3 major digital projects. 1st, planning, assortment and allocation. This will help the buying office in several ways, have the best assortment based on the client preferences and also profitability. To model the second one is they will have the ability to model lifecycle using products matching patterns. Also, something that is very ideal is that they will close the stores faster according to the product attributes And changes on the customer demand. They could be also available to identify cannibalization among different products. Then the order management will enable reliability that is very important for the customers And cost efficient that will help the profitability of the company. And finally, with transportation management, We will improve our planning processes and reduce the cost of our long haul routes. So that's what I Thank you for the logistic transformation. Thank you, and I will turn over to Antonio Thank you, Edwin. So now, let's talk a little bit about e commerce. Focusing on continuing with our ecosystem strategy, can we go to the next slide? We have decided To implement multiple fronts with one backup system. What does that mean? I mean, we're talking about liverpool.com, our app, suburia.com, our other 5 multisite pages. Well, they all be interconnected and will be interconnected at the customer level, At the catalog level, at the delivery process level, but on the front, they will all have their own DNA. So Sborigas DNA will be Sborigas DNA. Diversey and A will continue to be Diversey and A as well as the multisites we have. But on the back end, We'll have one same process. So that will simplify a lot of our strategy and it will allow us to scale it massively. We can go to the next slide. Continuing with this strategy, well, we need to focus on the best category offering we could afford. We have all the information of our customers to talk a little bit about that. We have a very close relationship with our vendors. So now let's talk a little bit about the best offering we can give them. We'll begin with a video of our latest accomplishments. So, First, let me give you what we talk about digital sales. Digital sales is a mix of leewaypool.com, our marketplace business, Our extended catalog that is through to some stores, services, suebia.com and the other 5 pages of the home multisites. Well, what's our results? It was mentioned in the video as well. But we've grown 7 times since 2017. And now what's our goal? Our goal is to increase our sales 3 times by 2025, and we're standing on a Huge increase by 2020 due to the pandemic. So in order to do this, our main goal one of our main goal and our main Businesses is Marketplace, which I'll talk about in the next line. Marketplace has a key role How can you put to the next slide, please? Marketplace as a key growth business, well, we've targeted To increase 16 times since 2020, that's our main goal. This will increase our share To 35% of e commerce sales by 2025. And also, we need to grow our catalog 13 times. What does this mean? This will represent that 80% of all the e commerce catalog will be of marketplace business. So as mentioned before, our marketplace is going to be one of our key growth businesses, one of our main goals. And to do that, we have some Competitive advantages that are explained in the next slide please. And our competitive advantage in the marketplace and why we are unique, Well, we have a brick and mortar sales. As you know, we have more than 10,000 items Throughout our sales stores and our sales team can sell marketplace products. They even getting commissioned by that. This is a world recognition. Very few retailers have done it. And we're very proud of talking about this Because our sales team not only doesn't have in their hands whatever is available at the store, they also have whatever is available at another store Or what is an online marketplace product as well. And they will also gain commission and as a model based on commission sales, This will help our people, as first point, and also to sell everything whenever the customer wants. One of another projects is the Fulfilled by Liverpool. Ed will mention a lot about the logistics platform they're building. Well, it will give us a fulfill by Liverpool model. Now we will be able to store marketplace products within our warehouses and increase the delivery time To deliverable standard levels. Also, well, we need to increase our sellers that are our service platform. We need to increase it by 10 times by 2025. This means restructuring the whole digital team. So now we are Fully in a restructured time, the team is growing tremendously and we are invested heavily on new talent and new players To overcome this increase in seller base. In a way to do that, we also need to change our seller center. We need to be one of the simplest and best ways to communicate with our vendors. And this is being built right now and it's The seller center that is going to be the simplest one there is in order to overcome this increasing growth. This seller center will also have Fully automation. There will be fully automation. Our sellers and our sellers will be able to perform whatever they want with their products. And one of another key competitive advantages is our hybrid vendors. As you know, BB Pool is very well positioned about the relationship we have with our current vendors. Well, with marketplace initiatives, we will be able to extend that relationship to higher levels. There will be some vendors that will have their current Products on the store and whatever they cannot put on the store on our web page that could be sold on the store, But also with fulfill by it will be stored in our warehouses, so the whole ecosystem starts to post with our hybrid vendors. Also, the next slide please. One of our key Strength is to provide the best aspiration for our customers. We have a very strong brand and we have very close relationship with our vendors. So can you go to the next slide please? We are changing the way we do business. First, we've always been client focused on client first, but now we're changing our structure to become agile To become agile and sell structure. What does that mean? I mean, what is this? Well, this allows us to work As a team faster and release every 2 to 3 weeks some upgrades to whatever we're building on the web page, whatever we're building on our app And whatever we're building with the logistics team, every 2 to 3 weeks, we're changing our and upgrading our system. One of our examples of things we're doing right now as a cell, we have part of government. We are Changing all the attributes, the way that we used to put them into the system to a simpler better way with our vendors. We have the sales app that is continually growing and continuously changing. We also need to upgrade our search and browse platform within the web page. Every product detail of every page has to be hyper personalized and we're building them. One of our key competitive advantage is our gift registry. It's continued to improve day by day. Edwin mentioned the delivery experiences, things that we are building right now. LibreBluePocket, our app, We surpassed 11,000,000 users last year that we're very proud of, 11,000,000 unique visitors in 1 year. We are currently having more than 4,000,000 users per month, unique users. And also personalization, as I mentioned before, One of our key initiatives is to be hyper personalized. Can we go to the next slide please? Now, What are we doing in our web page and what are we doing right now with our with the information we have? Well, we have to focus on the best e content there is. So other categories and fashion retail, which is not as simple as it sounds, we are changing the way we perform all the attributes with videos, With more content with more optimized media content. So our even our Buyers will be able to talk to the customers and tell them why are they buying this, why is this in a tendency, put video so you can see how the clothing behave And all of that is being done right now. Also, we're very proud to say that with the close relationship we have with our vendors, We have exclusive content. Can you go to the next slide? This is just an example of what we have. As many as you know, it's public. We have a unique relationship with the Disney Store. This gives us exclusive products and content in Mexico that can only be sold through Liverpool through liverpool.com and through our ecosystem. Yes, as an example, well, we'll be able to sell all the Disney and Pixar products, Marvel and Lucas, which Becomes more and more important every day. Our stores have been transformed into the Disney store. We will have exclusive dotcom business in Mexico. Also, we will be the only ones able to sell the products that are also in the theme parks in the U. S. And Europe, which are currently not in Mexico. So this is one of the examples that as a company we're doing to overcome and become stronger with our customers, understanding what they need And give them the best product assortment that they have. Now, I will turn it to Santiago, which will talk to you about the Financial Services. Thank you, Tony. Hello, everyone. I hope you and your families are all doing well. Today, I would like to review with what we are doing and where we want to be in the years to come Regarding financial services, you have heard from my colleagues about 1 stop shop. You have heard from Antonino what we are doing On the marketplace and everything that we are doing in order to serve our customers. Well, in Financial Services, we want to do exactly the same thing. We want to offer our customers a one stop shop and a marketplace to fulfill our customer needs our customer financial needs. If we can go to the next panel, please. Okay. In this chart, We are illustrating our general view of how we picture all the different services we want to include In this financial services one stop shop. Okay. First, if we go to the center oval, we have the monedero electronico, which Antonio talked about or monedero digital, In which I will be talking a little bit more in another slide. Then on the second oval, we have credit on us. Credit on us is credit to be used in our stores. Here we have and we have been issuing for probably The last 90 or 100 years, we have been issuing our private label Liverpool card. And recently, About 3 years ago, we started issuing the Suburvia private label card with and these products have various Credit plans like revolving credit, installment plans, deferred payments, etcetera. Here we also have What we call credit to a consumer. This is a new or non revolving credit. This is a new non revolving credit product that we are developing right now And I will further explain in another slide. Then on the next oval, we have credit of us, Which is credit to be used outside Liverpool and Subbuvia stores. Here we have the co branded Visa, Liverpool card and the co branded Suburvia Visa credit card. We are developing here personal loans. These are cash loans for qualified customers and our expectation is to start piloting on the 2nd semester This year's with personal loans. We are also developing a secured card program. This is going to allow us to target customers that we are rejecting credit today and this program will allow our customers with back credit bureau information To have access to credit and to start a good credit history. Then on the next oval, we have the Insurance distribution business. We already have a variety of products today like we have our extended warranty program, We have home insurance, life accident insurance, auto, health and here we also include All of our assistance services and by assistance services, I refer to auto assistance, home assistance, Medical consultation, ambulance, legal, dental, etcetera. Up to here, these are services we are already offering or we are in the process of developing. It is important to mention that all of our customers Today, they have digital access to all of these services, but we are conscious that we need to keep working in order to have the best assortment And to have the best omni channel experience for our customers. What we've seen is that probably most of the developed retailers Are already offering these kind of services. And then we have this final oval with other financial products, Which we believe only maybe up to 40% of these developed retailers are offering. And where we have products like Savings, checking accounts, time deposits, auto financing, mortgage, international remittances, foreign exchange, Etcetera, even up to very structured investment products. And we believe that here we can find very interesting Opportunities to serve our customers. Today, I am not going to go into detail into any of these opportunities since we are in the stage of analysis and evaluation of all of these products and services. This analysis includes The definition of what can we develop by ourselves and what needs to be done via an alliance or a partnership. If we can go to the next slide, please, Karl. Now we talked about Montero Digital and also Antonino mentioned it. This is going to be a very convenient omnichannel experience. We've had the Monadero for a very long time, but it was a physical Monadero And it was nominated, Monero. Today, what's going to happen is that it is going to be a personalized product And this is going to help us to establish a direct relationship with a full customer base. And obviously, this will help us to have All the customer information and all their habits and preferences of our customers. So we believe this is going to be A very good product for us. If we go to the next slide. I mentioned credit for consumer, where we're running a pilot test. This is, as I mentioned, a nonrevolving consumer credit Where we ask for an initial down payment and then we have weekly installment plans. Here on the right side, you can see The image these are actual images of how we are communicating to our customers where they can buy a fridge with only MXN 99 A week. And this product is addressed for lower, medium and upper low segments for the acquisition. Here we have durable goods, but actually what we are seeing on this pilot test is probably 40% of the total sales that we're doing today with these products Are being done for clothing also. So today, we are doing this pilot work. We are learning. We're doing a benchmark with All of our main competition and we are developing all of the technical operational capabilities since we are aware that this product It's going to have a different behavior of the actual products we have today. And by 2022, well, we hopefully we will be implementing all these Our capabilities we're developing today, so we can do a rollout for all the country and Expecting to have a growth in the share of our products in our sales and obviously to have an increase in sales. Then if we can go to the next slide, Pavel, please. Then we have these are just some examples I wanted to show you. We just launched the bill payments. These are other services that we're offering our customers where our customers can play all their bills And services by a simple way, just by one click, they can schedule their payments. And obviously, they can check all the payment and billing history. That is already going on today. If we can go to the next slide. We also have we already launched the digital issuance and digital applications and we are about to launch in the second The digital card issuance, instant digital card issuance. So this is our customers can come, they can digitally Apply for a credit card and if they are approved, they immediately will have the availability to go online shopping Or to go into one of our stores and make purchases with their e wallet and obviously they will have access as they have today with All of their cards to all of their financial information. They can check their balances, they can check their statements, they can check they're open to buy, Etcetera, etcetera. So as I mentioned, these are just some examples of things that we are developing right now And we are very conscious that we need to keep working in order to have the best assortment of services and products And the best omni channel experience for our customers. Thank you very much. And I will turn you to Mauricio. Thank you, Santiago. Now we'll jump to the next one, which is value added services. As you know, value added services and service in general has been part of our DNA throughout our history. But now we need to expand the definition further. Paolo, if you can go to the next one, please. We want to continue providing great service not only during the transaction, but also before and after the transaction. We have to do it in an omnichannel manner. Let me illustrate perhaps three areas where we see a particular opportunity. One is technology. Given the footprint that we have in selling technology, white goods, computers and electronics, We believe this is an area where we can simply make it easier for our customers not only to buy technology, but also to use technology. And that's an area that we see a particular market need, and we see also opportunities in the market given the recent Evolutions in the market. Secondly, we see opportunities at what we call the home level, which is we're a very strong player in terms of selling furniture And selling different items for your home. We basically want to help our customers build their house of their dreams, And we want to do it by providing better advice, by partnering better with designers and architects, etcetera. Finally, we also believe that we can help our customers as an individual. We believe that if we can help them feel better by looking better, And we can do that also by providing them advice on fashion and also by leveraging our strength in the In makeup and other categories, as you probably know, by leveraging also our VX Service, which is the beauty experience that we have launched in many of our stores. So we see great opportunities in those three areas And in order that we will explore going forward, but we believe technology is one where we can assign particular focus If we can move to the next one, please, Pao. So that's value added services. And now let me jump into loyalty, loyalty and rewards. If we can go to the next one, please. We have presented a pretty ambitious ecosystem strategy, and we see a loyalty program for the full Puerto Deliverable brands and assets As kind of an orchestrator, to some degree, kind of a glue to orchestrate and bring All of these assets together. We believe that the right loyalty program can help us, 1st, To know all of our customers. As Antonino mentioned, today we can assign basically around half of our sales to unique customers. We basically with this, we want also to target the other half. We now we want to know the full basically customer base and be able To uniquely assign almost every purchase to a single customer because we believe that, that will help us serve them better. Secondly, we believe that through a loyalty program, we can motivate some behaviors. For example, if a customer has tried Some of our categories with the loyalty program, we want to also motivate our customers to try and sample offering in other categories. And finally, by doing that, we also want to motivate better engagement with our customers. Obviously, we would love all of our customers to try our Financial services product and engage with us deeper. And we also would like all of our customers to download the Liverpool Pocket app And have a more intimate relationship with us so that we can serve them better and to also enable our customers to really, really take Full value of the ecosystem strategy, and we believe the loyalty program is a key corner store in that regard. We're currently in the process of designing this loyalty program, and we believe that design phase should be ready this year. If we move to the next slide, please. Now let me turn it over to Graciano, who will speak about Basically, the last initiative, which is how to maximize our ecosystem reach. [SPEAKER ANASTASIA ALVAREZ DE SOTO:] Hello again, everybody. Could you go to the next slide, please? Okay. So A few years ago, most of our CapEx was spent opening stores and shopping malls. [SPEAKER MARCO TRONCHETTI PROVERA:] It's going to change in the future. As you saw, we have a lot of initiatives in logistics, in IT, in digital that are going to [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Take up more than 2 thirds of our CapEx. So we are going to still open a few stores. For example, this year, we're opening 2 stores. Actually, one is more of moving one store from one place to the other one. So we're opening Tijuana and [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And so, we still feel there is quite a few opportunities to open stores that will Get us closer to our customer target. So we are opening stores, but it's going to be fewer and [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Your stores that have a really, really good place and that are that have a really good reason to be. If you go to the next slide, please. [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] We are not going to open shopping malls, but in the next 3 or 4 years, What we are going to do extensions, upgrades, we need to keep our shopping malls relevant to our customers. So For example, this year, we're going to finish the expansion of the upgrade of Gallivier Monterrey and Gallivier Estu Gentes, but we need to do that also on our Liverpool We need to have stores that have more entertainment for customers that have a better experience. And furthermore, the stores and the shopping malls are going to have different functions. They are going to work as a store, but they are also going to work as a delivery center And as distribution center. If you can go to the next slide, please. With that, my final comment on this side is we're going to see about ARS 8 MXN 1,000,000 of CapEx this year, mostly on IT and Logistics. And we expect that number to be closer to MXN 10000,000,000 for the following years. And again, as I said, mostly focused on areas that we didn't spend that much CapEx in the past. So with that, I'm going to turn it over to Mauricio to finish this ecosystem presentation. Thank you, Graziano. I believe we've seen many, many initiatives, and so let me try to summarize them briefly. First, we said that we wanted to establish a goal of being the 1st shopping option in the country. We mentioned that we had 3 specific Objectives to do that. 1 is closing the gap with the digital players, becoming the omnichannel leader And increasing the stickiness and the interaction with our customers. And to do that, we mentioned that we wanted to do it leveraging our strengths And focusing our efforts in 7 key commercial initiatives. 1st, Having the best category offering and growing them by leveraging the marketplace. 2nd is by having a one stop shop, Not necessarily with the largest assortment, but clearly with the best assortment. 3rd, we mentioned that we wanted to create A one stop shop for financial services, and Santiago elaborated on many of those ideas. 4th, we mentioned that we wanted to create inspiring content and a great omni channel experience. Then 5th, we said that we wanted to increase our value added services 6th, develop a loyalty program 7th, maximizing the ecosystem reach. And we want to do all of this supported by primarily 3 enablers: IT, data and the supply chain transformation. We clearly know that this is a pretty ambitious Goal and a pretty ambitious agenda, and we are working as a team to be able to not only Execute well this strategy, but also to continue operating the business as we have done over the past 170 years. We know that we need to execute all of this well if we really want to gain our customers' trust and be able to gain Location in our customers' first screen. So thank you very much. And with that, I will turn it over to Saje, We will elaborate on our sustainability strategy. Thank you, Mauricio. It's a pleasure to be here and share with you the Our sustainable strategy It's a frame and topics which guide our sustainable actions across all business units. What we named it is La Goya del Puerto del Liber Pul or the footprint. Okay. So next please, Paulina. In this model, as you can see, we consider the alignment between the business strategy, The customers' experience and the evolution of the services we bring. As we have heard throughout the presentation, We want to be in the top of the mind of our customers. So it's important to both the way of working inside the company and have new That's an answer to achieve this goal. Since 2018, we have defined sustainable initiatives on environmental performance, education and responsible sourcing to work with And improve the environmental, social and governance standards in the company. At the end of 2020, With all the changes and disruption happening, our materiality study was updated and now is represented in this model. In the right side, it's important to mention that all the stakeholders' perspectives are included as well. Next, please. The ESG Governance team is going to help us to monitor and align the initiatives and efforts across the business Units, currently, multidisciplinary teams across company are defining the KPIs, which will be measured for the next 5 years. And today, I will show you our approach to sustainability and the programs topic by topic, okay? So let's begin. Next, please. In terms of corporate governance, we foster a culture of integrity and best practices around compliance and ethics. We work to be congruent and transparent in our processes and behaviors. Last year, we obtained the 26th place in the Corporate Integrity Report published by Expansion, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] What it's named, the Companies Against Corruption. And we climbed 14 places in Corporate Reputation Business Monitor In LATAM, standing at the 12th position. Next, please. Regarding human capital management, the main efforts are centered in diversity and inclusion and improve the quality of life for our collaborators. We want to be a place where people like to stay at. In 2015, women in management in top management Represented 20% of gender participation, and now we proudly represent 27%. We want to empower women at work and bring some same opportunities to talent. Our philosophy is to grow the best talent because of its talent, Not because of a gender quote. Last year as well, we launched a wellness program for employees Called creating my best version. With its main focus on mental, physical and financial health, we brought Experts to help us manage emotions and other issues during the pandemic. And last week, for example, We have the first financial event for all the team members in order to help And oriented in the way that they can improve the use of money and the salaries. This year, the intention is as well to help bring diversity to build and add value to the strategies that we have seen And to increase the interaction to know each other better, with clubs to talk and learn about sports, cooking, art, Gaming, whatever, it's a free topic community. Next, please. The third one, about vendors and suppliers. Since 2019, we launched Responsible sourcing program with the intention to certify most of our strategic suppliers under international Work standards and environmental regulations, guaranteeing human and labor rights as well. And it was a What is our intention is to increase the level of ESG concept in the mindset And the decisions of our vendors, too. Next, please. In this model, we confirm our commitment to improve our customers' lives everywhere, anytime. In the digital world, we have reinforced The protection to customer information and cybersecurity in credit transactions. We have a solid digital strategy Through the Cybersecurity Operations Center for active monitoring and response to possible threats. For the 2nd consecutive year, We obtained the certification of compliance with the International Security Standard, PCI, In the use of credit and debit cards for payment. During the next 3 years, we will seek to improve Accessibility to our customers with motor disabilities and improved responsible consumption with greater financial education with the support Of credit areas. Next, please. Environmental performance. The environmental performance is one of our favorites. It's oriented to use clean energies and reduce impacts of gas emission and carbon footprint in our operations. We have contracts with 88% clean energy suppliers, additional to the owned by the government CFE For the following years, 34% already operating are already operating and 54 Are going to be connected or installed in the next 3 years. We have changed store lighting for LED In 98% of Liverpool stores, with a reduction of 12% in the electricity consumption. In 2020, We have redesigned our packaging to be a friendly with environment in all the business units. And with the transportation order management initiatives That will develop into logistics. We plan to reduce the emission of polluting gas by 10%. And as we saw before, for example, planned and new workplaces are considering with a sustainable design. Next, please. And last but not least is the social commitment perspective. We strongly believe in education. The skill of learning is the most valuable skill for the workforce today. Liverpool Virtual University has committed to help 17,000 collaborators to complete their Studies in basic and medium level education. Next, please, Paulina. And to promote as well a business administration degree, This is our projection of graduates that we want to have the next years through this arm we have with the university. With our flagship program in education, we will help people to improve their capabilities, their vision And the way they execute the things in a different way. We are thinking that with this effort, we are not only offering A good option. We are also offering growth and progress to our people. Our vision is as well to open these services to the community. Finally, last year, we donated in time ARS 170,000,000 to foundations we work with and are oriented To health and education. With all of these initiatives in mind the next one, please. With all of these initiatives in mind, El Portal Liber Pul is moving on the right direction, not only to be responsible with our community Or to support the long term vision of the company, but because we want to reinforce our commitment to serve our customers Every day, everywhere, anytime. Thank you so much for your attention. And I turn to Enrique with Costa. Yes. Thank you, Sajed. Thank you very much for your The explanation of what we're doing in terms of our footprint. And the next part of the presentation is to go directly to your Q and A without any Thank you, Adi. I just think that you already saw the figures for Q1, So I will not elaborate on them unless you have specific questions to I think that's a very use of our time. So I think I just have the instructions in the screen. You can raise your hand, and we'll give you With a microphone in order for you to ask your question directly. Thank you. Thank you, Enrique. Our first question comes from the line of Antonio Hernandez. Please state your company name and ask your question. Thank you. Hi, good morning. This is Antonio Hernandez from Barclays. Thanks for the event and taking my question. Well, actually, a couple of questions. Could you please repeat your CapEx guidance for the year? And my second question will be related. You mentioned private label's importance, and of course, that's very, very relevant for Suburbia. But Could you give also a little bit of some information of how relevant this could be maybe in the future for Liverpool format as well? Thanks. Yes. Thank you, Antonio. Well, in terms of the CapEx, What Graciano mentioned is that the guidance that we have for 2021 is basically around ARS 8,000,000,000. I think that our CapEx is going to be In the €7,000,000,000 to €8,000,000,000 range for this year and for the next several years. We're thinking specifically Probably for the 2022, 2023 time periods, CapEx is probably going to be more in the MXN 10,000,000,000 to MXN 12 ARS 1,000,000,000 range because we have a big investment related to ARCO Norte, the ARCO Norte project. So that We'll basically increase between ARS 1,500,000,000 and ARS 2,000,000,000 our CapEx for the next couple of years. And after that, we are thinking of our CapEx on a running rate of ARS 10,000,000. And as I explained also, The idea is the that the a big chunk of that, 40% to 50% of that is going to be devoted to our digital And our logistics technology initiatives and the majority of the other 50% to 60% is we have to do, as you saw, basically with maintaining our locations fresh and current. So it's going to be more focused on renovations and remodelings More than new stores. So in terms of new stores, the focus is clearly still on Zohrvia. On Zohrvia, we're thinking about 10 stores this year And running rate of around 15 stores per year starting 2022. So that's the color on our CapEx. And I don't know, Brasse, if you want to give a little bit of color around the importance of private labels and what are we thinking around them? Thank you for the question, Antonio. Private brands are really, really important for us for 2 Thanks. First, they have higher margins, and they also give us differentiation, especially now on [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] We just recently launched we ended the project maybe at the beginning of this year, which is called PLM, Which will enable us both in Saudi and Liverpool to better work our private label since the Idea of the label all the way to the delivery of the product. And in Liverpool, private label penetration, as you said, is lower than in Suburbia, but That I think is a little bit misleading because in Liverpool, we sell a lot of electronics and White goods where we are not considering having private labels. In clothing though, Liverpool is pretty strong On private labels, we have brands like That's It, MAP that are selling really well. We are not planning on building a ton of Mon Caramel, for example, is a good example in kids. We're not going to build a lot of new brands. What we're going to do is we're going to better leverage the brands that we already have, and we do believe that they are going to have a higher growth than [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] The other brands in the future, it's really important for us. We now have also the knowledge that Suburbia And Walmart had when we bought Suburge because they were as they sell around 70% on private labels. So we are using we use that to the PRM project, and we're going to use that in the future. I believe Private labels are going to be really, really important for clothing and fashion for us. Perfect. Thanks a lot. Appreciate your color on that. Thank you. Our next question comes from Louise Willard. Please state your company name and ask your question. Thank you. Hi, guys. Good morning. Thanks and congratulations for this first event. I hope it's a first for many more to come. I have 2 questions in the queue if I may. The first is, You mentioned that a large portion of the CapEx is oriented to remodeling and upgrading the stores At least in the next 5 years. So this I mean, it's a relevant portion of CapEx that seems to be a little bit more defensive than offensive play. So are you setting any metrics to ensure this investment does not erode the company's returns? That will be my first. Yes, Luis. Well, yes, we Basically, we're on a financial model for all the investments that we do. We have a threshold of 10% Minimum rate of return on an after tax basis, on a real basis, real terms basis inflation. That's our threshold. So as we take a look at every single one of these projects, We sort of do our best in order to make sure that we are not eroding our financial returns, as you're saying. So we will continue that discipline. That's the same thing that we have done in the past. As you're saying, it's Defensive, but it's also, I mean, in terms of protecting our franchise and making sure that we have both our stores And our shopping centers still relevant and fresh for our customers. So we think that that's the right thing to do in order to protect our franchise. But again, The financial discipline will be there in order to make sure that these renovations bring additional productivity to the stores, Perhaps also like redoing our selling space in order to have more square meters for the right categories Based on the customer needs, so that's those are the things that we have we need to we try to balance in any of those projects. Thank you, Ricky. And if I may, a second is, do you have the intention to increase the level of Information disclosure ahead maybe on a quarterly or at least semiannual basis to keep track of the evolution of the new strategy? Yes, I think the idea is that we will be in our press releases every quarter, We will give some color on the relevant advances or results that we have In the initiatives that we just explained. So yes, we will do our best in order to give you the investors and the analysts The right color in terms of what how are we doing vis a vis the objectives that we're setting for each of the initiatives that Thank you, so. As you might imagine, I mean, the idea, because all the initiatives that we just saw is to be very choiceful in terms of the Or just specifically, the next level of action plans that we have for each one, which are the right ones to do in terms of the value added That they bring to the company. So that's also something that we're doing as we speak in order to make sure that we have the right You know sequence of action plans for each of the initiatives. Thank you, Enrique. And again, congratulations on the event. Thank you, Luis. Our next question comes from Irma Skars. Please state your company name and go ahead with your question. Thank you. Yes. Hi, good morning. Thank you for taking my question. My name is Irma Skars from Goldman Sachs. I wanted to ask about and thank you also for presentation, very helpful to have the complete update on your vision. I wanted to ask a little bit about the network Design on the logistics side, how do you sort of and I'm sorry if I missed it along the presentation, but how do you sort of think It might split up further down the road between sort of fulfillment through your stores versus click and collect Versus sort of the fulfillment directly from the distribution center to the customer. Trying to think sort of how you're thinking about that network design by maybe 2025 or whichever time frame you think is And then the other question is regarding the technology. You've clearly laid out what the enablers are. I was just wondering sort of how do you think about the technology that you're specifically developing for the marketplace? You spoke about fulfillment offerings, the seller center. But how should we think about this ramp up sort of until when is the Technology ready and how should we think about that ramp up of that marketplace by 2025? Is it more back loaded given that maybe some technology components need to be developed and only then you can sort of accelerate the ramp up or is it relatively linear across that time frame? Thank you. Yes. Thank you, Irma, for the questions. I think that in terms of our network design, really like what's really new Two elements are really new on this. First, the size of our Conorte new location that you saw, It's huge. We're going to start with the big ticket facility, which is really not that new in terms of it's not going to be that new in terms of the technology. I think the technology for the big ticket items has not evolved a lot in the past several years. I think that so basically, While we're thinking about the first phase of the Aco Norte project is basically just to move the current Facility that we have in Hubertoka for mid ticket items to move that to Arco Norte. The next one It's really the big change in terms of sub lines because that will The combination of doing cross talk, which is basically what we do today at our Tultiplan distribution center, But also, we will be more aggressive in terms of holding inventory to follow demand in terms of trying to anticipate demand. We do some of that today in one facility called Bodega Central. But this is relatively small, so the scale In terms of what we're trying to do in Alcon Norte, it's completely different. So that's the first element of the new network design. And the second element is the fulfillment centers today. We really don't have fulfillment centers. We are trying to I'll build in the next several years the 7 that Edwin mentioned. And the idea there is to put those distribution centers, as you might imagine, In the big cities in Mexico, that's going to be, of course, a Mexico City with sort of already have that, Well, I'll have a Monterrey and so on and so forth. And the role of that fulfillment center is going to be twofold. It's going to first to serve as a Fulfilling or trying to renew the merchandise in the store. That's a replenishment role for our stores. And the other role that we're going to have is also to sell To send merchandise directly to customers' homes and complement that Last mile with our stores. So as a general color, I'll ask Edwin, if you please want to give you wants to give additional color on what we're trying to do in terms of the Network design and how are we seeing the click and collect layout? Yes. Thank you, Enrique. And Neema, We're working on the network design. We're building something very flexible in order to serve the customer in the most convenient way So the challenge here, as Enrique mentioned, is to ramp up the fulfillment centers and Orchestrates in a better way how during peak seasons, we avoid bottlenecks And do it in the most cost efficient way. About Click and Collect, all the network, all the stores We're going to be able to do click and collect, so the customer will choose if they want to use this method. And another challenge will be The distribution model, what I mentioned about the planning and settlement challenge because we are planning to do a soft allocation In order to sense the demand and then replenish to accelerate profitability. So I hope I answered your question. Yes, that's super helpful. Thank you. Our next question comes from Bob Ford. Please go ahead. Sorry, Emma. Just a minute. In terms of the second question, Wielma, in terms of the marketplace and the technology. And first, the second part of your question in terms of how the growth rates look for our marketplace initiative, you're absolutely right. They're More back loaded towards 2023, 2024, 2025. So in terms of the digital horizon that we're doing From now till 2025, the ballpark part of the growth comes in the latter part of that time frame. But in terms of the technology, I don't know Gerardo, do you want to give a little bit color together with Antonio in terms of what we're doing technology wise For our marketplace or our 3B initiative? Sure thing, and Luca. Thank you. Thank you very much. Yes. Technology wise, what we are doing is building platforms and tools that will support the growth for the marketplace business. Still there are some companies that we need to build, but everything is planned to be ready for As the business is ramping up, the marketplace business and so far there are some components that should be Integrated to our technology landscape and some others needs to be built, but everything is part of the plan. And I will turn it over to Antonino, who has Actually, the business side of that. Hi, Irma. Thanks for your question. On the part where you ask if the technology is ready, yes. A simple answer is yes. The technology is there. It's ready. As you know, we have partnered with the best companies Technology wise, we've partnered with Google, with Oracle, with Miracle, which is a specialized part of our marketplace model. Of course, it needs improvement, but we're ready. And the ramp up comes also from a process standpoint. So The business is growing tremendously. If we want to continue this growth, we are as I mentioned before, we're changing our structure. But I don't think that terminology right now is a stopper. Of course, we will be implementing it and upgrading it and changing it in order of how the business grows. But right now what we're changing is all our processes and our inside structure with the buying department, with our own digital department in order to ramp up this And grow way faster than we've had in the last couple of years. That's great. Thank you. Thank you, Irma. Thank you. Now we'll move on to the question from Bob Ford. Please state your company name and go ahead with your Good morning, everybody. Thanks for the presentation. My name is Bob Ford, and I'm with Bank of America Merrill. Graciano, what do you expect e commerce penetration to be as a percentage of overall mix in retail sales in 2025? And as you think about that going forward, how much of that's going to come cross border from China or the United States? And within that context, How should we think about real estate and Liverpool margins more broadly as the consumer goes increasingly digital? And as part of that, How are you thinking about using technology to maybe reduce cost in operating Thank you for the question. That's a tough one because you're asking me something in 2025. I'm not really sure the answer on 2022. But I think it's obviously going to grow. It's going to be very important. It's going to be, I don't know, around the 30s, maybe 40s percent. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] For us, I think overall for e commerce is going to be a little bit lower. We do expect to have a higher market share in e com than where we have in physical. That's why we are building all this. It's going to well, it's going to come from cross border from, I think, the U. S, you can see Amazon is Doing really well, really as well. I don't know, AliExpress is probably going to be a relevant player also. So I believe there are going to be 5, maybe 6 players counting Walmart and Coppell Who are going to win on this front? The actual number, it's a guess, so I don't know. But the main point is that the last year with the pandemic, the market grew and Found that it's easy to get your store your stuff and your purchases delivered to your home. So overall, I think The pandemic was the labor or the accelerator of all these initiatives. In 2025, I'm not really sure what the number is going to be. [SPEAKER ARI DE SA CAVALCANTE NETO:] In terms of what you said of physical footprint, I think that's one of the main advantages. If we [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] We mentioned it really fast, but planning assortment and allocation is a project that is the brain behind all the logistics, right? So the issue is [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] With that project combined with the physical side, which is planned, which is a distribution we charter the distribution centers, I'm going to be able to have the merchandise closer to the customer, and that's going to be that's going to allow me to deliver cheaper. Let me give you an example. For something that I deliver directly from my store, it's maybe 30% of the cost of something that I deliver from a warehouse. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] I think that was also part of the last question. What percentage of the deliveries I plan to make directly from the stores? We are ramping up that capacity to deliver most of what we can direct from our stores because it's cheaper than it's possible. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So I see all the footprint that we have as an advantage as the cost reduction. And you said technology reducing cost. [SPEAKER MARCO TRONCHETTI PROVERA:] We are having some projects on that like robotization and automatization on processes that are [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Very manual to date and that are very repetitive. What I see technology, not only that, but technology is going to help us improve the top line. We are focusing [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Most of our technology on improving the top line and customer satisfaction, and we have a few processes on [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Reducing costs, for example, transportation management, Aderlin also talked about, it's mainly how do we optimize our [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Primary transportation costs in order to transport less air and do it more efficiently with less [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Gasconceptions. There are a lot of projects, mostly going to help us on the top line, but there are some pretty relevant on the bottom on the cost side as well. I don't know if I answered your question. No, it was very comprehensive. Thank you very much. And with respect to just a general sense of margins, Do you envision a business because you're leveraging technology more effectively or you're creating adding more services to the ecosystem? Do you think you can maintain or improve on your current levels of profitability or the ones that we've historically seen? Or is Is there going to be some secular pressure that you're going to have to maybe top line growth, but the margins are going to be a little narrower? No, I no. Well, historical margins apart from last year, I hope you're asking, but Yes, no. Sorry. Last year, margins, sure you want to improve them. No, but I believe that margins are going to go back to the level we used to have, but it's going to be a combination because we're going to have more cost on the logistics side where we are having more deliveries [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And we're going to have some benefits on other parts of the businesses [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] We're going to have, as I said, improvements on the first road of the transportation efforts. We're going to reduce also [SPEAKER MARCO TRONCHETTI PROVERA:] When you have a better planning assortment and allocation, you reduce markdowns and you improve gross margin. So we're we see a combination of aspects They're going to essentially, we hope to return to the margins we saw pre COVID in the next couple of years. Not on this year, Understood. Thank you very much. Thank you. Our next question comes from Joaquin Please state your company name and ask your question. Hi, good day, everyone. Joaquin Le from Itau. Thank you for taking my question. It's I'm curious to know what's your opinion on the evolution of the credit business In relation with the evolution of the e commerce business, I mean, my sense is that probably you're selling 40%, 45% of what you sell in the brick and mortar business Through your credit card, but that proportion is materially higher in the e commerce business. So, Graciano, you mentioned that Might be in the 30s or the 40s in of your total retail sales in 2025. So how should we think on the contribution Of the credit business to your consolidated numbers by then and therefore to your profitability. Yes. Thank you, Joaquin. I think that I will ask since we have Santiago here and he is the expert on the credit card. Yes, we have just to stay very brief and then I'll pass the mic to Santiago. Yes, we are thinking financial models at the Credit card portfolio and because of that, the revenues from the financial side of the business Will or should grow ahead of our retail sales, reflecting exactly what you're saying in terms of the penetration that we have of our credit card On our digital sales, which is materially higher, as you said, than what we have at the bricks and mortar. And on the other hand, What we're doing in terms of the revenue that we generate for the for sales on the Of course, part of our portfolio. That's the invoicing that we do with our credit card for everything outside The Liverpool stores and digital websites. And finally, with all the initiatives that Santiago described, We're taking a look as we speak in order to enhance our financial service offering. But Having said that, Santiago, please go ahead and give some additional color, please. Thank you for your question. And I think you pretty much already answered the question, Enrique. And yes, as you mentioned, today in the brick and mortar sales, It's close to 47%, what we have in penetration with our own products. It would be This is in Liverpool. It would be like, I would say, 40% with our private label and another 7% With our Visa portfolio, in our e commerce sales, it is much higher. Sometimes it is even closer To 60% probably. First of all, one of the reasons is because we don't receive we don't have cash sales or we didn't have cash Sales in our e commerce, no? So obviously, the way that it was divided, automatically the percentage of the penetration It is much higher, no? So what do we expect? Well, we really hope that even for 2025, we keep And if possible, not just keep the same percentages that we have in penetration, but obviously trying even to increase. And that's why we are trying to go to different segments of the market like for example the credit to consumer that we had With these new products or with the guaranteed credit card that we are also trying to launch in order to gain A larger percent of the cake and a bigger percentage of the penetration with our product. So Yes. Hopefully, we will try to be closer to 50% or even above 50% in the penetration. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] I hope that answers your question. Can I chip in a little bit as well? If you guys think that the Retail business is going to be disrupted by new technologies. The credit and the payment business is going to be A lot more disruptive is going to be so I think that business is going to change a lot in the next few years, [SPEAKER MARCO TRONCHETTI PROVERA:] And that's why Santel is building this financial marketplace because the changes we're going to see in the way we pay Are going to be huge in next 3 to 5 years. Thank you. Thank you, Joaquin. Our next question comes from Joseph Giordano. Please state your company name and go ahead with your question. Hello, everyone. This is Joseph Giordano at JPMorgan. And thanks for taking my question. Congratulations On the first event, very insightful. I have a few questions here. So like I'll start with technology and then end on the financial service. So the first one on the technology And all the architecture you guys are developing, you mentioned you partner up with major technology companies. But here, like I would really I'd like to understand what's actually proprietary and why is that so we want to understand what's really changing Inside the corporate culture, particularly in terms of agile teams. And in this context, how are you guys Trying to bring this different type of employee, right? So the tech guy with mindset. Also within the STACK context, we see throughout the region like several bolt on M and As Accelerate technology development. So I'd like to pick your brains here and how you guys think about like how those small acquisitions could actually further accelerate Your digital transformation process. Then thinking like on the long term vision of being on the front screen of the smartphones, right, And being like the preferred destination for shopping, my question here is like on how you guys think about higher frequency So household products, eventually groceries and how like you can embrace other bricks and mortar retailers into your platforms. And here like We have a clear gap in Mexico. So Walmex is doing that very well, but we do not see like other major players doing that Other than Corner Shop. And lastly, going to the financial services, and I completely agree that's something that really has to be transformed. I'd like to see like how you guys think about the integration of the Monadero, the e wallet and creating like a closed loop environment system here, right? That's why I asked about the higher frequency categories and integrate that with the credit card and the loyalty programs. Thank you. Yes. Thank you, Josef. I think that so I'll go 1 by 1 in terms of the tech and While you asked in terms of proprietary technology, what we're doing in terms of agile teams, what we're planning to do in terms of talent acquisition and retention. And finally, on the M and A, I'll just on the M and A, I think that we're I was thinking that perhaps M and A, very punctual and very specific acquisitions may complement and accelerate Some of the initiatives that we have just described in the presentation. So we don't have anything like specific and the short term, But we clearly know that, that could be a way for us to accelerate and build The capabilities that we need much faster. So again, we don't have anything like in the short term to announce, Both clearly does in the long term picture that we have described for the presentation. Now for the other three things, I'll ask Gerardo and perhaps Antonino to give some color in terms of the proprietary part of our technology, Agile teams and talent, please go ahead, Gerardo. Yes. Thank you, Josep, for your question. Yes. In terms of the proprietary technology, what we are aiming to do is build an open tech ecosystem or landscape. We are willing to take advantage of technology that is already available. So that's the reason we have partnerships Like the one we announced last year with Google, right? So we are trying to take advantage of what is already there for us to take That will help us to accelerate the and enable critical capabilities for the business. So we will try to, as much as possible, keep an open technology ecosystem and taking advantage of our partnerships. On regards to Agility, we have, as Antonio mentioned, we already have some Digital products, we already have some product sales or squads that are We're working that way using agile methodologies. And what we are doing is just scaling up to the rest of the organization. And of course, it's a challenge to work on culture and mindset. That's the real challenge in that. We have a plan to scale it up and make sure that we provide the team with the proper tools to make that happen. That will help us also to attract and retain talent for technology. Antonio, I don't know if you want to complement. Yes. Thanks, Gerardo. Thanks, Josef. I'm going A little bit more on the job part. Well, Gerardo mentioned, and we've come from a couple of years ago to launching 1 I'm going to say 8 to 7 projects the whole year. Last year, when we implemented this new technology, as Gerardo mentioned, it started in the digital part of the business. We were able to implement more than 150 new features. This year, we're growing into 400 new features and Ojerard is expanding it to the whole organization. And regarding talent, well, we have 2 main strategies. 1 is, obviously, retain the talent that we have. I believe we have one of the best talents in the company, so in Mexico, sorry, and we need to retain it. So there's a lot of cannibalization. There's a lot of offering between even the Mexican retailers, the peer players. So yes, that's part of our everyday Business not right now, and we are currently focused on how to retain it, stop the cannibalization and retain our best, The best of the best, we have them here and we need to retain them. So we are currently reviewing how they are, reviewing their not just only their monetary Compensation about how are their lives, how can we improve their lives and SAGE helping us a lot on that every day. And also The other part is we need to bring the best of the best. So yes, we are also when we have an opening and specific talent, We do first analyze obviously internally, but we do also focus on what's the best out there, whatever they are, In whichever country they are and we try to bring them here. So yes, we are really, really focused on our talent and that's part of Our main success is being able to sustain and maintain the time that we already have. Thank you, Tony. Now going to the second question in terms of the lockdown vision and what might be the role of the higher frequency categories In that vision that we have, I think that we also understand very clearly that In order to have a sticky experience, as Mauricio said, in the ecosystem, 1 pager, we need To us, to our portfolio, precisely categories that have basically a weekly spending pattern Instead of or a monthly or by monthly or even semester by semester spending pattern, which is the case for most of the categories that we're currently offering. So we also that's something that we are studying as we speak, what will be the best in our way to bring those high frequency categories Into our portfolio, most likely that will involve some kind of partnership instead of going greenfield. But at this point in time, that is still In the very early stages in terms of the internal discussions, but again, it's clearly on our radar. I don't know, Rasevi, you want to give Additional color on that? Yes. I think part of you touched The subject pretty well, I think you understood it pretty well. We need to upgrade our marketplace capabilities in order to Increased frequency of our customer and that includes adding additional categories, which we are currently working today. So I think, Yes, we need to look outside of our current offerings, and that's why we are developing Market based on a faster scale. Thank you. And then last but not least on the Financial Services and The integration on when we're talking about a closed loop with Monadero or even thinking about an open loop to use the Monadero outside our current offering and it is for partnerships Or other ways to do that, I'll ask Santiago to also provide some color. Please, Santiago. Thank you, Enrique. And thank you, Joseph, For your question, as Enrique mentioned, yes, on the closed loop products that we have today like the Monovero, as As I mentioned, we believe that we are already doing a good job in integrating it with everything, not because with the Monidero that is being launched On these days, you can go directly and make purchases on e commerce, you can go to the store and make purchases and you can check your balance And you can do transfers to somebody else and you want to transfer this Monadero. For example, we also have the Monadero Of the Visa card, which is a loyalty program that we would eventually need to integrate with the all of the loyalty program that we are developing For all of our state customers, so in this case, you can move the money from your Loyalty program of the Visa card from that Monadero, you can move it automatically to the new digital Monadero that we have. So we believe that on the closed loop, this integration is pretty much being done today. With the e wallet, for example, you can automatically go and do purchases in e commerce. You can go to the store and pay With your telephone in all of the stores, you can consult your balances, you're open to buy your statements, all of the purchases, all of the payments, Everything is pretty much. And I think right now the challenge is to go to an open loop. As I mentioned on the last Over that we had on that illustration that I showed you, when we want to go and want to integrate An open loop account that would be like a checking account or a savings account that would be probably the next step. And definitely here that we are right now in the process Analysis and exploration, yes, definitely we believe that it is most likely that this will be done through a partnership, a partnership Or an alliance with a technological partner or with a financial institution alliance that we can do. And we have an example of the way that we are doing this with the insurance, okay? On the insurance distribution business that we have today, The way that we are doing is we're not even we're not an insurance company and we're not even a broker. So the way that we are doing this is Through alliances and through partnerships that we have with different brokers and with different insurance companies And the way that we do it, we just integrate that into our Liverpool pocket in order for the customers to be Very convenient in order to if they want to buy an insurance by just one click is integrated and it can be charged to your private label Credit card, no? So something like that scheme that we have today within our insurance distribution business Is the way that we see that it could probably be done on the open loop accounts? I don't know if I answered your question. Yes, you answered. Thank you very much. Thank you, Josef. Thank you, Joseph. Our next question comes from Vanessa Quiroga. Please state your company name and go ahead with your question. Hi, thank you. Hello, everybody. It's good to see you all together. Vanessa Quiroga from Credit Suisse. My questions, I have a couple. I wanted to get a better idea in terms of your unitary delivery cost. Going back A little bit in terms of the results. I mean, since the pandemic started, can you tell us By how much your unitary delivery cost was reduced? And what strategies did you Implement to achieve that. Also, if you could give us some base numbers for some of the targets that you are Presenting, in terms of marketplace sellers, for example, how many do you have today? And in terms of the next day deliveries That you are that you want to achieve, what percentage of your current sales are right now being made next day? Thank you. Yes. Thank you, Vanessa, for your questions. I think that fortunately, I have Edwin today with me. He is Really the one that knows everything about supply chain and logistics. So I'll ask Kerwin, he's the one that knows obviously, Here to give us some color on how the last mile delivery cost has evolved since the start of the pandemic In March last year, to what we have today and what's behind the reduction that we have seen in the past are basically At 12 months, please go ahead, Edwin. Yes. Thank you, Enrique. I'm Vanessa. The reduction that we see Since the pandemic started in terms of shipping directly to the customer, If we send the product from the store, we have reached a 70% reduction in the costs Observing since the pandemic started. And doing this from our warehouse is a 40% reduction. How did we achieve this? Obviously, the volume that we received at the beginning of the pandemic was not in any forecast. So that was we need to go to 3PLs without having Reference tolls on the services. So Since we improved our forecast accuracy and we increased the delivery capacity from the warehouses and enabled the work From the stores in a more efficient way, using also crowdsource delivery methods because Those are were exploding in terms of they were available at lower cost and at higher frequency. So that was one of the strategies that we did we took and those are the results that we Get right now. And on your second question, the same day delivery, we are planning to do 10% of our total deliveries, same day. Right now, we're above the plan. The way we are managing this initiative and the change management, As I mentioned, the people involved in this process and the knowledge about the importance of the time of the Delivery time that we offer to customer is really in the mindset of our collaborators. So we are above our plans. And in medium and long term plans, we intend to, in a couple of years, Which above 30% and then above in between 70% 80% of our deliveries. Obviously, we need to improve, as we've been mentioning, the distribution because we need to have the product closer because The capabilities to deliver from stores or from warehouses or from the fulfillments that we are going to build are going to be there. The big challenge is to allocate the product closer in the network to win in this initiative. So I hope I answered both of your questions. Yes. Edouard, thank you very much. Hi, Vanessa. Regarding your question number 2, which is about the marketplace sellers. Yes. Yes. We're currently on numbers around 1200. That's for our numbers because they go up and down. And yes, as mentioned before, we are planning to grow that certain times. So that's why we need to have the best of the best and change the structure We have right now to optimize that group. Excellent. And I guess the last one, your target of 3 times increase in e commerce sales, Is that does that include 3P? Yes. Yes. Yes. Yes. Yes. Yes. It's the whole enchilada. It's all the digital channels that Donino explained. So when we're talking digital, It involves .com, it involves the mobile web or the marketplace and it involves also the extended catalog. So I think that we have exciting opportunities And also the multisite, which basically are the gare.comandthepotterybarn.com websites. So when we're talking digital, that's the whole thing, Vanessa. Okay, okay, great. How would you how do you envision your same store sales growth going forward? Obviously, 2021 will be a recovery year, but After that, where do you think the normalized same store sales look like, including the growth in e commerce? Yes. Well, Oizla, as you're saying, I mean, this year is going to be a little bit strange because Especially, so Q2, the comparison against previous year is going to be completely crazy. But if you just first talking about 2021, what we're thinking is that the basal decay, I mean, to have A comparison against 2019, which is the last, let's say, a normal year, again, makes sense. So We're thinking at least in our current plans, we have for Liverpool same store sales for 2021 A minus 6% for April, December compared to 2019. And in the case of Suburbia, It's a combination of minus 13% in Q2 and then basically a 6% growth in the 2nd semester, again, Comparing against 2019. So that's to give you a flavor of how we're thinking about 2021. Hopefully, you know those are conservative numbers. We were really surprised, as Asano said, by March. March, I mean, Liverpool Tes were 51% above 2020, Which, as you know, the second half of March was already an effect of the pandemic. But even comparing against 2019, our retail sales in March for LibreBlue and Sumbria combined 11% above March 2019. So that was a confidence booster In terms of our expectations for the rest of the year, so hopefully, the numbers that I gave to you turn out to be on the conservative side For the balance of the year. Now going forward, in terms of financial models, we usually, for our same store sales, You know the 3 percent of GDP growth in real terms, Which with inflation should give us, you know, sector sales growth of 5% to 6%. That's basically Our thinking in terms of our merchandise sales. And then on top of that, you should put the 3P Growth rates that we just mentioned, which are not included in those 5% to 6% center sales. Excellent, excellent, Enrique. How much of that 3P sales represents today of your total revenues? Well, today, the share of marketplace in 2020 was around 6% of the digital sales. And as Antonino explained, our 2025 target is 35%. So That gives you good flavor of how that will play out. Thank you very much for all that color, Enrique and team. Thanks. Thank you, Vanessa. Our next question comes from Andrew Rubin. Please state your Just continuing the questions on Marketplace, you mentioned the hybrid vendors. And I'm curious how you think about managing the suppliers on both the 1P versus 3P side, how to manage Any conflicts and understanding what goods would go 1P versus 3P, just getting more color on your plans there would be very helpful. Thank you. Thank you, Andrew. Again, I'll take advantage of the expert here, Antonino. I think that as you might imagine, I mean, this is A very delicate balance in terms of with our merchants and all our buyers. I mean, in order to balance the 1P and 3P has been a really challenging and insightful discussion, right, Antonio? Please go ahead. Thank you, Enrique. Thank you, Andrew. Thank you for your question. Yes, as Enrique mentioned, that's a hot topic right now. Well, I'll try to explain it the best that I can. Currently, we have a buyer's expertise as one of our greatest assets here in the company, But we have limitations. We have purchasing limitations. We have store space limitations. So let's say what we're doing is we're focusing with some partners where they have more inventory that we can handle. So what we're doing is we put it and it's all going to be automatic. That's the catch. It has to be all automatic With automation and working with the data that I mentioned before, so our buyers expertise will decide This is the white shirt that is going to go into the store because it's a fashion trend. However, if the merchandise were out of stock And the vendors do have them automatically put it into 3PL and sell it. And also With Fulfill by which Edwin is building, we will be able also to handle some inventory from our vendors over there. So it's a mix between the expertise and the data we have with what our Vendors and the close relationship we have with them and how can we mix them all automatically to have 1 omni channel experience and a seamless experience for the customer. I don't know if I answered your question, Eduardo. Got it. Okay. No, That's helpful. And it makes sense on current limitations on shelf space and how that's not the case with 3P. And then I guess just as a follow-up, when you're thinking about the plan to grow the sellers by 13x, you'd be getting away from some of the Traditional vendors that you work with. So where is that growth going to come from? Is it going to bring you into new categories, new Products or what type of sellers are you targeting? Thanks again. Thanks, Andrew. Oh, yes. And it's been mentioned before. Of course, we need to experience and we're analyzing new categories that a lot of vendors will come into. Our main focus in our marketplace is to complement our offer. So, yes, we are planning to complement our offer. We have, as you mentioned, limited shelf space. And we are currently working on vendors that will complement what we have. Some will overcome, but right now our goal is to complement and give more of what we have, but not exactly the same. So, yes, we're focusing on new products, new categories, especially new vendors. And also, as I mentioned before, exploiting the vendors that we already have To get more out of them with this partnership we already are into. Thank you. Our next question comes from Rodrigo Alcantara. Please state your company name and ask your question. Thank you. Hi. Hi, thanks for taking my question. Rodrigo Alcantara from UBS. Three quick ones, if I may, Enrique. The first one, Just as a way to wrap up everything here, well, you mentioned your target for 2025 expectations For digital, fintech, right. So but if you were to give an order in terms of priorities For 2021, what would you say would be your top 3, top 5 priorities on this front? That would be my first question. Thanks. Yes. Thank you, Rodrigo. You mean top five priorities in terms of the ecosystem strategy? That's correct, yes. Okay. I think I'll ask Mauricio so he can have some time to give Some perspective on what we think are our 5 key things that we need to deliver in the short terms in terms of everything that We share it, Mauricio. Please go ahead. Sure. Thank you, Rodrigo, for your question. And I would perhaps answer it in 2 ways. 1 is in terms of enablers And the other one is in terms of commercial initiatives. In terms of enablers, I believe the IT transformation And the supply chain transformations are the 2 main ones that we need to get significant progress on since those enablers will help us accelerate Many of the commercial ideas that we've already shared. And in terms of the commercial ideas, if I had to name 1, probably I would name the marketplace. I believe Antonino has shared a lot of info in that regard, but I believe that's a key one very linked to our core That will help us with our 3 main objectives, again, reducing the gap versus digital natives, Getting or strengthening our assets versus the omni channel players and also and very important, increasing our stickiness by getting into new categories. So I had to name 3. Those would be perhaps the 2 enablers and the marketplace. That's helpful. The second one would be on the infrastructure network, which I found quite interesting, this New addition of the 7 omnichannel fulfillment centers, which is different when compared to your previous Plans were not where these 7 DCs were not considered. So I was wondering what drove this Change relative to the previous plans, which appear an infrastructure more similar to the ones of Walmart, Marco Libero or Amazon They have in Mexico. And on this front, I don't know, for 2021, should we expect 3, 2 DCs to be built? Or what's the target on this front? Yes. Thank you, Rodrigo. You're going to go into to answer that, Edwin, please. Yes. First, the infrastructure plan because we are seeing the customer behavior. We need to be more ideal, we need to be more flexible and much more scalable and closer to the demand. So we are not only building the infrastructure, but we are also changing our commercial model in terms of Change more for a full commercial model rather than only a push. So that was the main issue that drives this change. And how many are we going to open? 1st, we're going to start transforming A couple of warehouses that we have, a couple of ops that we have the size, we have the location And we are going to incorporate new capabilities and prepare the systems. Obviously, as I mentioned, a big part of this To start the operations of the fulfillment centers is the change in the Cushman model and that is depending On the implementation of planning and absorbent. So we believe that we could start operations in 2022 With a couple of them, but not in this year. This year, the total focus is in Big ticket infrastructure for Arconoorte and delivering to the customer from the stores. I hope I answered your question. Yes, that's clear. And the last one, just for the sake of clarity here on the marketplace discussion. When we're talking about 6%, 2020 is 35%, I mean, we're talking about in terms of GMV. I mean, Marketplace GMV equivalent to 6% of total sales growth? Or are we talking about marketplace Internet sales As a percentage of total sales, just to get some clarity here, that would be my And also here, on the incentives that you are giving to sellers, if you can give us any sense of How take rates or other incentives are you giving to sellers To the parent share versus competitors? That will be my last question. Yes. Antonio, you want to clarify the 6% is what was the base in order just to be transparent and talk about the take rates And incentives for sellers to get you on board with us? Thank you, Rodrigo. Thank you for your question. Yes. Just to clarify, it's a 6% of e commerce sales. It's the total GMV of e commerce that's 6% and we're planning to grow to 35% of that same sales, The marketplace part. And the overall GMV of digital sales grow by 3x in the next 4 years. And regarding the incentives and the sellers, we're organizing differently and the incentives we have It's clearly what we really are known for. We are a company based on performing and having a close relationship with our sellers. So we are not as aggressive as many competitors on our sellers. We try to make a partnership instead of just a transaction Part of course with this growth, we cannot maintain the same one to one relationship, but that's why we are structuring differently To overcome this and have a lot more one to one transactions with our top sellers, the other ones try to give them an automation process And of course, being less aggressive than our competitors, obviously focusing on our customers, but also understanding where they are, What are their options? Leverage with what Liverpool is offering and also having a close relationship with them in order to what we're doing, What we want to do, what's our promotion, what comes up next, they want to participate. So we are mainly just focusing on those issues, having The best experience for a seller that they can have and also having incentives that are a little less aggressive and we will help them Have a win win relationship with us. I don't know if I answered your question, Rodrigo. Yes, that's very clear. Thank you very much. And once again, thanks Our next question comes from Alvaro Garcia. Please state your company name and ask your question. Thank you. Hi, gentlemen. Thanks. Thank you. It's Alvaro Garcia from BTG Pactual. I have 3 questions. My first question is for Edwin. Similar to what Vanessa asked, You mentioned sort of your goals for same day delivery over the next couple of years through plan. But I was wondering if you could talk a little bit about How you think of vertical integration in delivery and maybe not same day delivery, but maybe next day or second day delivery goals Yes, Alvaro. In terms of our vertical integration, I believe that we're working in a very collaborative way, First, defining the processes of the buying office operations, adhesives and technology in order to do a very lean And user friendly way to manage the footprint. So Obviously, the challenge is not only same day delivery. That depends on the time When the customer is really doing the purchase order, it depends on if there's a delivery window to still accomplish The same day. So we are mentioning also in hours. If we deliver in the 1st 24 hours or less, If you buy it by 10 p. M, you will receive your product by 8 a. M. So in the customer mindset, that could be Same day, David. And how we are managing the rest of the volume. As I mentioned, The moment where the customer is buying and also the moment when we can fulfill directly from stores. We are believing that in a peak season and a higher market share volume, We need to operate 24 hours also in stores in order to be Able to be back in shape and start delivering first time in the morning as soon as it's a proper A time frame for the customer to receive the product. So that we shrink also the time For 24 hours or 48 hours, even though we need To do the picking from another store that doesn't have the assortment but is in the same city, we could still achieve That's helpful. And then going back to Joaquin's question, it's itself has been difficult for us to measure sort of what the standalone profitability And your credit division is and then I guess it's a clarification, but as you Explore all of these new ovals on the FinTech side of things, on the credit side of things, particularly the standalone credit Offering you have that you're developing, is it fair to assume sort of as a follow-up to Joaquin, is it fair to assume That you expect the profitability of your credit division to increase through 2025? Yes, absolutely. I think that's one of our goals. I think that, as you know, because of the pandemic, Our credit portfolio has been shrinking due to the conservative actions that we took in order to keep our risk Levels, we think the parameters that we feel comfortable. So In the very short term, the profitability and that could basically comes from the size of the portfolio It's like being under pressure. But the idea behind All the growth initiatives that you saw that involve taking a bigger share in terms of the Leerpool sales And all the additional things we're doing or trying to do outside, that should, of course, give us Like higher growth rates for the Financial Services business visavis what we have seen in the past several years. And Teo, do you want Go ahead and complement and give additional favor, please. Yes. Thank you, Enrique, and thank you for your question. Yes. As you explained, Enrique, yes, definitely, we are hoping to have an increase in the profitability Of the Financial Services business, but it is important to mention that today What we believe on the first tables that we have on the left side on that chart is the those are the most profit Both business where we see that the most of the profitability for the Financial Services business comes from now and that is something that we already have developed. We need to keep working on it. We are still doing a lot of and we have a very, very big list of the Nice things to have in order to have a better experience for our customers in these products, but that is something that already exists. As Enrique mentioned, Unfortunately, well, due to the pandemic, yes, the portfolios declined and obviously, the profitability went down. Also, you know the NPLs also peaked due to the pandemia. But hopefully, both For this year and the next years, we're seeing a good recovery. We will see a good recovery. And as we keep developing the other areas That I showed you a new product, well, definitely, they will have to add something to the profitability of this business, Even though we believe that the main profitability comes from what we are already doing today. That's helpful. And yes, certainly you've seen solid trends on the NPL front. And then just one last one on something we haven't spoken about today, which is Your boutiques portfolio, so these strategic partnerships with Gap, with Pottery Barn, with a lot of different brands, to my understanding is that This business line maybe hasn't done as well as of late. And I was wondering how you're thinking about this business over the next 3 to 5 years. Is it something that you'll continue to seek or maybe exit going forward? Thank you. Yes. Thank you, Alvaro. Well, I think that, as I'm sure you know, I mean, at some point in time, probably 4 or 5 years ago, we thought about the boutiques, The standalone boutiques has a growth strategy. And frankly, we were disappointed by the profitability that we saw On those lines of business, we have been like either Like trimming our portfolio, we have abandoned the exclusivity that we have with several brands. And also, we have been Rationalizing our the number of locations that we have under these banners in order to make sure that we only Stay with the ones that are on the positive EBITDA or cash flow generation. So That's not going to change. I think we're going to continue to have more or less the same number of store fronts that we have Today, we don't see that business, as you know, as a growth strategy. Flat Creek, what we see is that having that Limited number of storefronts allows us to have those brands exclusively in our stores, and that's where it makes sense, I mean, To do the combination of by having the storefronts, having exclusive rights to sell the Gap merchandise or the Banana Republic merchandise In our stores. So that really is how we see the role of the boutiques as we stand today. We don't have any brands that are not present in Mexico and may like potentially add to the portfolio. But if they come, it will be under this combination of committing to open a very limited number of storefronts If and only if we have the exclusive rights to sell that merchandise In our basically Liverpool brand. Yes. Great. Many, many thanks. Thanks for the Investor Day. Appreciate it. Thank you, Alain. Thank you. Our next question comes from Sergio Matsumoto. Please state your company name and ask your question. Yes. Sergio Matsumoto from Citigroup. Good morning. Thanks for the space. Two questions. The first is more on the 2025 Strategy, when you look at the competitive landscape when it comes to omni channel, What type of leadership do you seek to achieve or perhaps in certain areas Maybe differentiate from those 3 to 5 players that you mentioned before. And how would Mexico's e commerce market differ from those in other countries, either in Latin America or in Develop the markets, that's the first question. Yes. Thank you, Sergio. I don't know, Gracem, if you want to provide your perspective on what we mean by leadership on the opening channel Yes, I think we different companies were born different ways. So we arrived at a moment example, we have food waste in Mexico, which is hard to replicate. We have 70,000 employees in Mexico that can allow us to give Services to our customers that are hard to replicate. We have the credit side of the business, which We have more than 5,000,000 credit cards issue, which are hard to replicate. So that's not to differentiate from From the pure players or other people, they have other advantages, we have ours. And I believe that if we do This ecosystem strategy correctly, we will be more relevant than ever to our customers. I think The fast steps we have done on our pocket on our app, on the logistics side, Which last year was chaotic, but we turned it around pretty fast. And on changes we need to improve on our digital side Thanks for that. That's very clear. My second question is on Suburbia. How does Suburbia fit into this 2025 ecosystem Strategy. And is it still a growth driver for the group for to penetrate to different demographics? Or has the experience during 2020 give you a different give it a different positioning for the format? I think Suburbia fits Really well on this strategy because it had focused on another customer base That we didn't have as Liverpool. 2020, as you said, was difficult for clothing overall. People didn't go out of their houses that much and especially formal clothing didn't sell at all last year. So it was tough for Zugurga, but that doesn't mean [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] That's going to be the new normal, right? So I believe people don't want to go out and see their friends' offices are returning now in Mexico City. So I we still do believe that Suburbia is plan for growth path we're going to take. We're going to Growth more stores in Suburbia than we had in Liverpool. But we are also going to Suburbia's online capabilities were not good last year. And we believe there's also a growth path on the digital side of SUGO to become truly omnichannel as well. Our next question comes from Rodrigo Echagare. Please state your company name And go ahead with your question. Thank you. Okay. Okay, go ahead. Thank you. This is Rodrigo from Scotiabank. Thanks for the presentation. A couple of questions from my end. The first one is related to customer acquisition cost and the lifetime customer value. On the former, Arguably, because of lockdowns, the acquisition cost was likely Slow in general for the industry. And so I was wondering what strategies do you have in place, if anything specific at all To acquire more customers, whether through high risk spending on advertising or shipping subsidies or anything Of that sort. And the second, on the presentation, you mentioned that you've been Tracking more than 200 variables to understand and calculate lifetime customer value. So I was wondering What have you learned from that process? And can you share some insights on trends around This lifetime customer value? Thank you. You want to go ahead and Tonino and answer those questions? Yes. Thank you, Enrique. Hi, Rodrigo. Thank you for your question. Regarding our lifetime value, you mentioned what are the acquisition costs and The strategy in place to increase that, well, good news for us is that over the last Year, our new customer database or our new customers, and I'm meaning as omnichannel company, not just digital, grew by more than 150%. That's new customers that we didn't have. So yes, we're currently being able to get to new customers within Mexico. And what are new strategies that we're doing? And I believe that's a very, very good question and a very fair question. Well, we mentioned the whole strategy that has been in this presentation, like An omni channel strategy with new categories, with new offerings. Also, We changed a lot our marketing acquisition and our marketing strategies and they've proven to work. Our digital marketing strategies have been completely different from, let's say, 3 years ago. Also the partnership with some strategic companies like Google Cloud Platform, Google Intelligence Platform Has helped us understand better where are the customers and how can we approach them in a new and better way. And as I mentioned, the results are incredible. We've grown Quite a bit in new customers. And mentioning the 200 variables and what will be what have we learned about them? Sorry, but that it's Well, as mentioned before, 60 we've learned that we have very, very, very profitable Customers that I mentioned before and quite a few that are negatives, but that's really small compared to another retailer. So we're okay with that and we need to change that. But that's not our main goal. What we've learned is that 60% of our customers are in the middle and we've learned that with very little effort we can increase The lifetime value. And we're giving a lot of examples, but let's say in the first time you buy on digital, we give you A special promo code or we give you an omni channel experience the first time you go in the store or the first time you use one of the financial services in the store or online And those incentives have helped us move little by little that 59% all the way to the right side of the bar, which is where they want. We want our customers to become higher and top customers. And yes, with all the teams and with all the effort we presented you before, We have learned a lot of our customers and we're using those trends and we're doing a bit by bit Some incentives and testing them and NBTs and see if that works and then we scale them completely to the whole customer database in order to increase our last remark. Don't know if I answer you, Rodrigo, about the question. Yes. No, that's helpful. And maybe just a follow-up on a couple of things. As we talked about the key players that have a shot at being competitive Online, obviously, there is no mention on regarding some more direct competitors like Grupo Sanborns Is there and so in my mind, there is a big opportunity there for you guys, obviously. Is there anything specific That you are doing to address that opportunity, is there anything specific that you can do to address those customers? I don't know if Graceno wants to provide some color on that. In terms of I think that one of the things that we have been trying to do Recently, precisely to expand the more definition of competition, which before We basically prior to all this growth that we have seen in digital in the past 2 years basically or 3 years, Basically, the comparison that we saw was basically against, well, precisely what you're saying, How old Palazzo de Hierro and Rupo Salo also were doing. And based on the performance that we have seen, we have gained a lot of share in the past 3 years. We were patting our backs and saying, well, we're doing a great job on that. But frankly, I mean, the digital natives Have been growing like crazy. So I think that we are doing or we have been doing a great job in terms of Taking share away from our traditional competitors, but we need to move faster and catch up in several things That, you know, the Amazons and the MercadoLibres and obviously, all Walmart also and even Copel have been doing on the digital front. So I think that, again, what we are doing against the traditional players is working very well, and we continue To leverage on that, but the challenge now is to be competitive with this newer landscape. I don't understand, you want to provide an additional perspective. Thank you. You called it outright. Our competition has changed because the customer is changing as well. So we need to focus on that new capabilities. We need to build that change. We are we didn't see other a couple of years ago, we had a very clear set of our competitors and now it has grown. Got it. Fair enough. Okay, that's helpful. Thank you guys for the presentation. Thank you, Rodrigo. Thank you. And our final question comes from Jorge Benitez. This is Jorge Benitez from Hico Value Partners. Thank you very much for the presentation. I actually just have one question related to the Financial Services Unit. I don't know if you can give us a little more On terms of credit quality and how it should evolve in the future, not only because of the economic environment, but Also because the change of mix that you could face given the new products that you are about to launch, this change of mix is going to change the delinquency ratios regardless if they improve or deteriorate just for the mix? Thank you. Yes, Santiago, please go ahead. Okay. Thank you, Jorge, for your question. That's a very good question. Yes. Well, as you know, definitely, we have seen deterioration on the quality of the portfolio With the pandemic, no? But I think the good news is when we redid The all of our budgets, we had really expected it to be much, much worse than what we are seeing today. So obviously, we implemented all kind of support to our customers, all kind of plans that they can To help them to stay current to all of our customers. So what we are seeing today For example, the entry rates and the early delinquency rates that we have today, they are even better And prior to the pandemic. So it has been a very even though obviously we have today the NPLs KPIs Are higher than what we had because of the situation. But today, the early stages that we are seeing, They look very well. So today, if you look at all of our portfolios altogether are under 6% So what we believe is from here on is that hopefully well, we're starting to grow the portfolio again. We're starting to Get more new accounts that obviously that is going to change also the equation. But we believe that we can get back to the levels where we feel comfortable. Definitely, these new products That I mentioned that we are developing right now like Credit or Consumono, which is a completely new It's the product for us. We need to learn and that's exactly what we are doing today. Today, we are it is a small pilot test that we are doing We are learning and part of this learning process is getting to know the customer and getting to know The behavior of the customers, we are putting on our books customers that otherwise we would never do with our credit card. And what we need to do is for this specific portfolio is we need to find the right financials because as you know, for example, in our portfolios, We have a very big chunk of our sales that are done on non interest installment plans. The famous message in Entereses, you know. So and on these products, well, there's a different pricing. So in this project, there is not going to be any non interest installment plans. So that will allow us to have Higher delinquency rates in this kind of products, no? So we need to find the right and the precise pricing from these products. And as I mentioned, today we are in the process of learning and putting all of our capabilities and creating our capabilities For example, collections, we know that collections are going to be quite different from what we do today. So yes, with our actual portfolios, we feel comfortable today with the levels of risk that we are seeing And well, we need to address on these new products, address what we want to have in terms of the risk. I don't know if I answer, Jorge, your question. Yes, yes, perfectly. Thank you very much. Just a bit follow-up on reserves, because if we compare To the banking systems, I mean, just in the credit card business, you have a very good and competitive NPL But I think reserves are slightly higher than the market. So are you comfortable with this level, like you're planning to release some reserves? Or maybe You can use it to cover the trade risk of the new products. What's your strategy there and if you're comfortable with that? Well, it's the definitely, I'm going to start by the last question. Definitely not to cover the new products. No, I think each product has to be And create their own reserves. They have to be out of not because we have the level of reserves It's different that the ones that we have for example for the Liverpool private label and the one that we have for Liverpool Visa And the ones we have for Suburbia, for example, the Suburbia portfolio, which are riskier portfolios, we have much higher levels Of coverage with our reserves. Yes, definitely, we understand that we are we have higher than probably the market In reserves, but yes, we feel comfortable. We much rather like to be conservative in these cases. And today because well, this year even though today we're seeing that the behavior is pretty good, but I think that There are still some things in this year that make us not sure of what is going to really happen. So we'd rather be With this kind of reserves than being with just very tight levels of coverage with the reserves. Great. Thank you very much. Thank you, Jorge. Thank you. That concludes our question and answer session. I will now pass over to Enrique Guijosa for some closing remarks. Well, very quickly, thanks a lot, Amin. Thanks a lot. We have been taking almost 2 hours and 45 minutes to make a presentation, which we We hope it was useful for you to get clarity in terms of where we're going and appreciate your time and look forward to the next year to continue this

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