RIO DE JANEIRO, BRAZIL – São Paulo’s Magazine Luiza chain will open the first 23 of a total of at least 50 physical stores in the state of Rio de Janeiro by the end of 2021.
The project is boosted by a robust brand experience campaign. There will be a clip featuring the Rio de Janeiro star performer Anitta and Lu, Magalu’s digital girl in the advertising campaign.
Magalu will also be present in the city of Rio, by financing the renovation of buses from the BRT system, as well as SuperVia commuter trains, which will be provided with free Wi-Fi. The company will also offer blue rental bicycles on Rio’s streets, in a model similar to Itaú’s orange.
The total investment has not been disclosed. But it may come close to R$100 (US$20) million, considering that Magazine Luiza announced it would invest R$25 million in the second half of 2020, when it reached the Federal District with the target of building a distribution center and 10 physical stores (one-fifth of the network planned for Rio).
After years away from retail in Rio justified by the lack of security in the state, the company took the first step towards opening the physical store chain in October last year, when it opened a distribution center in the Xerém district of Rio suburb Duque de Caxias. The operation enabled the company to expand its e-commerce services, which took off during the pandemic. It also gains further momentum when coupled with the physical operation.
“This entrance is not only Magalu’s physical stores in Rio, as we already had e-commerce. When we bring stores, we provide a series of improvements in customer experience, such as reduced delivery times, the option of picking up and returning products in stores,” Eduardo Galanternick, Magalu’s Vice-President of Business said.
For the executive, coming to Rio is a “historic” moment for the company, compared to the move made in 2008 in São Paulo, when 50 stores were opened, 46 of them in one day. In 2019, Magalu also made a breakthrough arrival in Pará, with 48 operations.
However, the operation in Rio has importance because the state has the second largest GDP in the country, Galanternick stresses.
“In such an important place, we understood that we had to run a campaign to match the state, to help us connect with Rio de Janeiro residents. We began by involving Anitta in this campaign, the girl from Rio, who will join Lu, the girl from the internet, in a music video to be released next week. And there will be other initiatives focused on Rio, where people are always outside, in the street. We want to be where Rio residents are,” he says.
The strategy is known as branding experience, when marketing agencies develop specific initiatives to promote a brand to the consumer through experiences. In Rio, Magalu will do this by renovating 30 BRT buses, which will have their upholstery and air conditioning repaired, in addition to getting free Wi-Fi.
The vehicles will temporarily run with the campaign’s image of the retailer’s arrival in the Rio de Janeiro market, but the improvements will remain. Supervia trains will also be covered with advertising and will have free Wi-Fi internet access.
For over a month, there will also be 1,000 bicycles – all in a shade of blue – with rental paid by Magalu. There will be the traditional campaign banners pulled by airplanes flying along the shoreline and the distribution of 40,000 sunshades for the summer. Christ the Redeemer will also be part of the campaign, illuminated in blue with laser beams coming down onto the chain’s stores.
On average, Magalu sells two thirds of its products through digital channels. In the first quarter this year, this share reached 70%, when the pandemic outbreak led to another period of store closures. Nevertheless, physical sales grew 4% in comparison with January to March 2020. In the period, the company made 154 inaugurations, reaching 1,310 stores nationwide. This network boosts digital activities.
“Rio will immediately be offered in-store pickup. A third of our sales today are made in this modality, and Rio de Janeiro residents did not have access to this. In addition, we gain in speed, both for pickup and delivery, since all these stores will have delivery from the unit,” says Galanternick.
“Today, 96% of store deliveries occur within 24 hours. In Rio, our shortest delivery time is 2 days. So we will begin with 24-hour deliveries. Nationwide, we now have 60 stores that deliver in one hour, and we will take this to Rio.”
By working as small points of the logistics network, physical stores help to further expand the base of local sellers in Magazine Luiza’s marketplace, the executive says.
There are at least 50 stores planned for the state by the end of the year, which will be opened in 3 stages. The first of them, in early July, will comprise 23 units. They will cover the capital, with addresses in Ipanema, Copacabana, Bangu and the downtown area (Alfândega and Uruguaiana streets) as well as the Metropolitan Region cities of Niterói and Belford Roxo, and interior cities such as Araruama and Petrópolis.
The second stage will occur in the third quarter of the year, with the inauguration confirmed in BarraShopping, in Barra da Tijuca, and other shopping malls.
The wave of openings in the pandemic was adapted to ensure health security, Fabrício Garcia, Magalu’s Vice President of Operations points out:
“Until 2019, we had grand openings, which crowded the stores, there were promotions, crowding, a huge volume of people. We have entered 4 new markets in the past 3 years. In Maranhão and Goiás, in 2018. And in 2019, in Pará and Mato Grosso. Then, last year, we entered the Federal District in August, but in the pandemic. So it was done very differently, because our priority was to ensure the safety of our employees and customers. We started without announcing the opening date, to prevent crowds, with social distancing protocols.”
The first 23 openings resulted in 700 hires of locally selected professionals in a process that reached 13,000 applicants looking for a position. Including the distribution center, the number of hires is close to 1,000.
By November, the distribution center in Duque de Caxias will also grow from the current 30,000 m² to 80,000 m².
Source: Exame