What retail: how a "reverse racist" made $ 4 billion on innovation

Louise Elena Trajena is called the queen of Brazilian retail - she turned a small chain of consumer electronics stores into one of the largest companies in the country. She also fights for the rights of women and minorities, yes,

“I started selling when I was 12. My family is very fond of retail, we have always been strong in innovation. We created an electronics store when no one thought about it, we abandoned the walls in the room, ”this is how Louise Elena Trajenou explained how she managed to create a stable company in a state with an unstable economy. The 72-year-old entrepreneur is the chairman of the board of directors of Magazine Luiza, or Magalu for short, which she led for 18 years. Thirty years ago, before the spread of the Internet, she managed to sell things through computer virtual stores. Now the fortune of a businesswoman is estimated by Forbes at $ 4.3 billion. In 2013, Trajenu created the non-governmental organization Women of Brazil (Grupo Mulheres do Brasil), which fights for equal rights in education, business and other areas.

Youth behind the counter

Luisa Elena Trajenu Inacio Rodriguez was born in 1948 in Franca, São Paulo. Louise was named after her aunt, from whom the girl inherited her entrepreneurial spirit. The woman worked as a saleswoman all her life, and in 1957, together with her husband, she bought a small gift shop. To choose a name for her future business, she announced a competition on local radio. The choice fell on Magazine Luiza in honor of its owner, who had a reputation in the city as a good saleswoman. Louise Trajenou started working there at the age of 12, running small errands to earn money for Christmas presents. After school, the girl entered the law faculty of a local university, but she did not work a single day in her specialty: at the age of 17, she officially became an employee of the family store. The enterprising aunt and uncle began to expand the business, attracting other relatives to him, including Louise Helena's parents. In 1974, the family opened the first department store with an area of ​​​​5 thousand square meters. m, and later began to open stores in different parts of the state of Sao Paulo. By 1977, the Trajenu family had 30 outlets, and a few years later, entrepreneurs expanded out of state. Then, in the 1980s, the company began to computerize its business: in particular, it created an automated distribution center.

All these years, Louise Elena has worked in various positions, including a saleswoman and a store manager. In 1991, at the request of her aunt, she headed Magazine Luiza. One of the first important innovations was the creation of a kind of virtual store - this happened in 1992, long before the era of the Internet. Most large retailers opened points in large cities, believing that in small cities the population had insufficient purchasing power. The Magazine Luiza network went to small towns, but with a different concept: there were only computers on which the goods were displayed on the premises, and there were no goods themselves. “Customers came to see video products, consulted with sellers, and then bought goods. After that, it was delivered directly to the buyer's home, ”Trazhenu explained in an interview.

Another idea implemented by Trajenu was the “Fantastic Sale” campaign: on one of the days in early January, stores opened at five in the morning and goods were sold with discounts of up to 70%. This event was first held in 1993. At first, even her own aunt did not support the entrepreneur’s idea, believing that no one would get up so early. Worried, Trajenu even asked some of the employees to come without a uniform to stand near the shops and create the appearance of a queue. But even before the outlets opened, buyers crowded in front of them. During the first five hours of operation, the company managed to sell almost $450,000 worth of goods. Subsequently, many Brazilian retailers adopted this promotion.

At the time, one of Magazine Luiza's main competitors, the Casas Bahia retail chain, which also sold household appliances and furniture, bought a huge amount of television advertising. Trajenu even joked that there were so many commercials that Jornal Nacional, a nationwide news broadcast, aired in between. Lacking large budgets for television advertising, Magazine Luiza entered into an agreement with a popular Brazilian talk show and distributed its products under the Fausteu Truck section: the audience sent their applications for the draw, and the prizes were brought to them in a branded truck. Products appeared in the rubric so often that many viewers thought that the host of the program, Fausto Silva, was a network partner or even Luisa Elena's husband. The entrepreneur also devoted a lot of time to working with staff. For example, I created a bonus program,

The network is almighty

In 2000, Trajenu was one of the first to catch a new trend - Magazine Luiza had a website. “We quickly managed to move our huge database of photos and videos to the Web,” the entrepreneur said. “Given that not everyone had computers back then, people continued to come to our stores and shop online with the help of our salespeople. We began to accustom them to e-commerce.” Frederico Trajenu, the son of the owner, who worked as an analyst at Deutsche Bank, was responsible for the company's digitalization process. The company entered into a contract with one of the largest Brazilian banks, Unibanco, to provide loans to customers for the purchase of goods. Later, Magazine Luiza, in partnership with the insurance company BNP Paribas Cardif, created its own insurance company, Luizaseg, which sold insurance that guaranteed payment for purchases made,

The network expanded both by opening its own outlets and by buying smaller competitors in different regions of the country, such as Lojas Líder (São Paulo), Lojas Arno (Rio Grande de Sul) and Lojas Base (Santa Catarina). In addition, it became omnichannel: the same infrastructure was used for sales both online and in physical points. In 2008, 46 new stores opened in the city and state of São Paulo in one day, bringing Magazine Luiza to 1 million new customers. The entrepreneur dreamed of 50 points at once, but four had to wait due to bureaucratic difficulties with construction. “This is a special moment for Magazine Luiza,” Trajenu commented. “From childhood, I heard how my aunt wanted to open 50 stores at once in Sao Paulo.” For this, 2 thousand employees were hired,

In 2009, Magazine Luiza CEO Marcelo Silva was appointed CEO of the company. The entrepreneur herself remained in the status of chairman of the board of directors. In November of the same year, her husband died of a heart attack, which was a serious shock for Trajenu. It happened on a family ranch in the state of Minas Gerais, and Louise Elena was the first to discover the deceased. “I am not a depressed person,” she later said. I don't think too much about problems, preferring to think about solutions. But the loss of my husband, who was more than just a partner to me, was a blow to me. I was saved from depression by passion for what I do.

Photo: Paulo Friedman / Bloomberg

In the next two years, the company acquired the chains Lojas Maia in the northeast of the country and Baú da Felicidade in the states of São Paulo, Minas Gerais and Paraná. In 2011, Magazine Luiza, then the third largest home appliance retailer in Brazil, went public with an IPO on the Brazilian Stock Exchange. The $2 billion company sold 57.9 million shares for about $10 and raised $586 million. The chain had about 600 outlets, 21,000 employees and 20 million customers. Following the course of digitalization, in 2012 Magazine Luiza created the Magazine Você partner platform, with the help of which any users could create their own virtual store, advertise it on social networks and sell company products in it with a commission of up to 12%. Two years later, Luizalabs appeared - a laboratory

With the arrival of Federico Trajenu as CEO in January 2016, Magazine Luiza began to further strengthen its position on the Internet. The network consisted of 790 physical outlets, and e-commerce accounted for 22% of the company's total revenue. Over the following years, Magazine Luiza created a marketplace through which it sold partners' products. In 2018, two years after the launch, the marketplace had 3.3 thousand sellers, 4.3 million goods, and sales amounted to $220 million. It sold not only household appliances, but also other products, such as goods for children. In 2019, the company bought NetShoes, one of Brazil's largest electronic trading platforms for clothing, footwear and sporting goods, for $115 million. According to the Brazilian online publication Terra, this allowed the company to increase its customer base by 7 million people,

Trade relations

According to Statista, in 2019, the global retail market generated $25 trillion in sales. It is predicted that by 2027 it will reach $27 trillion. The top 250 retailers (including Magazine Luiza at No. 209) have combined revenue of $4.85 trillion, according to Deloitte's Global Retail 2021 report. Of these, $2.2 trillion came from North America, $1.6 trillion from Europe, $786.3 billion from the Asia-Pacific region, $90.6 billion from Latin America, and $68.2 billion from Africa and the Middle East. 11 of the world's 250 largest retailers come from three Latin American countries: Brazil (four), Mexico (five) and Chile (two). Five of the world's 250 largest retailers are located in Russia - X5 Retail Group, Magnit, Lenta, MVideo.Eldorado and Dixy.

All about his mother

Luisa Helena Trajenou, as Chairman of the Board of Directors of Magazine Luiza, was actively involved in personnel and social activities. Throughout her career, she supported the company's employees, for example, since 1998, employees with children under the age of ten received a monthly allowance of about $ 100 from the company to pay for a nanny or financially help relatives caring for a child.

Employees with children with disabilities also received a monthly allowance of approximately $125. A special fund compensated workers with serious illnesses from 50% to 100% of the cost of medicines. “In our company, men and women in the same positions are paid the same,” Trajenu emphasized. In interviews and public speeches, she often called for more women to be hired in leadership positions. “This does not mean that you need to go against men: I am a big supporter of the unification of masculine and feminine,” she shared. “But how is it that there is no woman on the board of directors of the company who thinks differently than a man? ..”

In 2017, shocked by the murder of the manager of one of the company's stores (the killer was her husband), Trajenu recorded a video message calling for the fight against domestic violence. In a company where 50% of the staff were women, a hotline was opened, through which it was possible to report the fact of domestic violence. Magazine Luiza provided the victim with psychological and legal support, informed the authorities and looked for an opportunity to transfer the employee to another city. For companies that hired outsourced workers for Magazine Luiza, a quota was introduced: at least 2% of employees had to be women who suffered from domestic violence.

Initiatives found understanding far from everyone. For example, in September 2020, Trajenu tweeted that from next year, the Magalu internship program would be available only to black candidates. Some users have accused Magazine Luiza of "reverse racism" against whites, and Deputy Prime Minister Carlos Jorgi has told Brazil's lower house of the National Congress that he will file a complaint with the Labor Ministry. Sergio Camargo, president of the Palmares Cultural Foundation, which promotes Brazilians of African descent, also filed accusations of racism. “Magazine Luiza will have to set up a race court in their department so that browns and whites cannot go through a selection process that is reserved exclusively for blacks. Therefore, he will have to analyze the phenotype of the candidates, which makes you remember Nazism,” he said. Trajenu explained that the company has always had a mixed trainee program, but it has never worked. “We did this not to change Brazil, but to change our company. Of the more than 2,000 interns selected today, only ten were black, she stated. “People still don’t understand what the structural racism we face is.” According to the company's 2020 annual report, this decision attracted 22,000 black candidates, 19 of whom were accepted for internships. only ten were black,” she stated. “People still don’t understand what the structural racism we face is.” According to the company's 2020 annual report, this decision attracted 22,000 black candidates, 19 of whom were accepted for internships. only ten were black,” she stated. “People still don’t understand what the structural racism we face is.” According to the company's 2020 annual report, this decision attracted 22,000 black candidates, 19 of whom were accepted for internships.

“Our company always grows in times of crisis. When he is gone, I start to worry, ”said Trazhenu once. Magalu continued to expand in 2020. During the quarantine, the company was forced to close its physical points and send employees home. Online sales have become the main way of survival. In particular, an application was created that allowed 14,000 partner stores to join the Magalu ecosystem, and added several thousand new products to the platform, in particular hygiene products and long-term storage products. As noted in the 2020 report, products now account for 40% of sales on the Magalu e-platform. The company's total revenue for 2020 amounted to $8.3 billion, which is 60% more than in 2019. Online sales increased by 131% and reached $5.4 billion, or 66% of total revenue.

From July to December 2020, Magalu acquired ten companies, including AiQFome, a ready-to-eat food delivery service serving 350 cities and a customer base of 2 million users, Hub Fintech financial platform, and GFL, a logistics service serving 60 municipalities in the country.

Magalu now has 1,301 physical stores and 23 distribution centers in 21 states, employs more than 40,000 people, and has 32 million active customers, including app and website users. For example, he hosts the YouTube show "I would never have thought that ...", where he discusses the problems of business, healthcare, science and education. Together with Women of Brazil, she created the United by Vaccine movement to promote the smooth delivery of the COVID-19 vaccine.throughout the country and attracted entrepreneurs and heads of various companies to it. When Trajena was asked what habits she picked up during the self-isolation, she replied: “I learned how to make up better because I participated in a lot of online activities. I've also learned to be more patient."

View from the outside

“Magazine Luiza is one of the major retail players in the Brazilian market thanks to its differentiation, strong logistics platform and digital ecosystem. In addition, the company continues to conduct M&A transactions and is accelerating the development of its e-platform. The accelerated growth of e-commerce is a global trend around the world, and last year's pandemic restrictions have accelerated this process. But the Brazilian market is relatively underdeveloped, with e-commerce penetration rates of 4–5% compared to approximately 13–15% on average in Latin America.

The company is one of the players in the best position to ensure the sector's sustainable growth in the coming years (five-year CAGR of 15%) and drive industry consolidation. A customer-centric business model with a focus on digitalization and process automation should continue to drive market share growth. Over the next five years, revenue will grow by an average of 29% per year, and the average annual growth rate of earnings per share will be about 34%.”