Momentum

New store formats for new realities

Marcos Gouvêa de Souza (mgsouza@gsmd.com.br), CEO, GS&MD – Gouvêa de

Souza

Recently, Lojas Renner, one of Brazil’s top department store chains, announced it will
open next March a new store format dedicated to its Blue Steel private label brand, in
São Paulo. Last week, it had already started opening smaller shops. These moves
follows what DIY chain Telhanorte announced last year and what Marisa apparel chain
also did, opening underwear stores. Or, prior to that, Tok&Stok furniture chain did with
compact shopping center stores.
Recently, O Boticário cosmetics group announced its new business, called Eudora,
focusing on a different consumer and with a multichannel approach, with direct sales,
flagship stores and e-commerce.
The strong growth of the domestic market in the last years, specially in the retail
segment, and the arrival of new consumers in the spending market have been making
more urgent to develop new businesses, channels, brands and store formats to serve
this huge market potential that has been added fast and consistently to the economy.
There are completely new businesses, as Boticário’s Eudora, but also franchising
chains, as Arezzo and Via Uno have been building. Or internet travel services being
added to the company’s portfolio, as Saraiva bookstore also announced recently. It all
coming to the market at an amazing pace.
There are new channels, as Casas Bahia, Walmart and Carrefour opened in 2010.
There are new store formats to serve emerging markets and regions or to expand in
mature markets with a new value proposition. And there are more products and brands,
segmented, to address this growth, as companies as Procter & Gamble and Unilever
have been doing.
One can notice never before in this country the market occupation speed has been so
high as in the last years, a move that seems to be in that way. Businesses, channels,
formats, products and brands have been reanalyzed as a growth and market occupation
strategy, all over the country. One can’t consider the country with a unique approach,
risking huge mistakes. The average growth is huge, but some income brackets, regions
or market segments have been growing even faster, demanding companies to present
fast and innovative solutions, before the competition does it.
How can one ignore Brazilian retail sales rose around 11% last year, among the world’s
highest, but the Northeastern region had almost twice this growth and in the Northeast
and Midwest sales went up by 13%? How to serve the new market demands, fast and
consistently? How to exploit the ongoing growth of the Information and Communications
segment, with an over 25% expansion last year? Or Furniture and Electronics, with
more than 18% growth?
For retailers, the ongoing organic expansion, the safest option, becomes now a
challenge, as the speed of identification of the best real estate, project development and
people selection and training can’t follow the demand growth, requiring a more
innovative thinking process.
Overseas, in moments like this, or by other reasons, some retail companies have
chosen other growth strategies, using buying groups, franchising, licensing or hybrid
models, but also creating new businesses, store formats and channels to speed up the
occupation of recently created markets or to increase their market share in existing
markets.
Under any circumstances, more than ever, one needs to think outside the box. And fast.