Brazil's biggest retailers push for online sales after pandemic

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August 4 - In March last year, Oziel da Silva Santos needed a new TV, but was clueless about how to get one because of COVID 19 restrictions in Belem, the 50-year old needed it. He followed a link on the website of furniture retailer Via Varejo and called a store manager.

On the other end of the line was Railton Sampaio, a manager in the city's largest Via Varejo. Sampaio helped him buy the TV online, and then sent the link for payment through the commonly used messaging app WhatsApp.

Santos is one of the millions of Brazilians making a first-time purchase online as a result of the pandemic, a vital new market for the country's largest retailers. Stores are updating their strategy and pursuing merger and acquisition to help smooth the transition to Internet shopping for inexperienced customers.

In four months, Santos made five more online purchases with Via Varejo salesman's help, which generated commissions for the store agents.

Sampaio's sales team is an example of a growing digital strategy among Brazil's biggest retailers to increase revenue and attract new online customers after lockdowns shuttered most brick and mortar stores early in the pandemic.

When a March 20th city ordered the closure of all store in brazilian towns, Via Varejo sales decreased 70%. Almost immediately, the retailer mobilized its 20,000 sales people to sell on social platforms Facebook and WhatsApp. The pandemic accelerated our digital transformation and we did what was expected in a few months, Via Varejo CEO Roberto Fulcherberguer said.

Each store opened a Facebook account and salespeople introduced first offers to friends and family. The campaign Call Me on Zap, a popular nickname for the popular WhatsApp messaging app, provided online chatrooms with store managers.

Even as physical store locations closed due to the recent national vaccine rollout in recent months, Via Varejo and rivals such as Magazine Luiza SA and Lojas Americanas SA continue to push for online sales. At Via Varejo, 56% of revenue comes from online sales compared to 30% pre-pandemic.

Now that salespeople have sold online, are eager to sell. I get a good part of my commissions online, said Karina Ferreira Dias, saleswoman at a large Via Varejo store in Sao Paulo metropolitan area. Unlike other companies, Via Varejo has not reduced staff even when most of its stores were closed.

Luiza magazine has a similar strategy. During the Pandemic, salespeople were able to sell via an app. They get commissions on everything they sell, be it online, third party products in the marketplace or in person, said Eduardo Galanternick, its vice-president.

The largest companies, Lojas Renner and apparel retailer Luiza raised more than $3 billion in combined share offerings and invested proceeds mainly in M&A.

Luiza and Via Varejo's M&A strategy was to bulk up their digital presence to face increasing competition from panregional rivals such as Mercadolibre Inc., one of Latin America's most valuable firms, Amazon.com Inc. and even AliExpress. They have built marketplaces with tens of thousands of third party sellers each.

In August last month, Via Varejo acquired Fintech Celer, aimed at increasing the financial products it offers through its digital banking and credit app BanQi. It has purchased six companies since last year and created a venture capital fund which will invest 200 million reais in technology startups over the next five years.

Luiza purchased 12 startups last year, of which nine were tech startups. So far this year, the company has bought 10 businesses, including delivery firms, Fintechs and e-commerce firms specialized in beauty products, food and videogames.

Most of the deals bolstered the online and offline service to consumers, enabling mixes of the online and offline services that Brazilian retailers hope will help them compete with big Internet companies. Luiza magazine, for example, opened 23 of its retail stores in Rio de Janeiro last month and plans to reach 50 by the end of the year.

Some retailers, both of which went into bankruptcy protection during the pandemic and lacking digital strategy, went into liquidity - protection, such as bookstore chains Saraiva Livreiros and appliance retailer Maquina de Vendas. They now have a meager chance of exiting it, financial analysts say.

The pandemic sharply separated winners and losers in Brazilian retail and what they did during this period will define their future, said Ricardo Lacerda, CEO of investment bank BR Partners, who advised some of Brazil's largest retail deals.