SAGA Magalu – Episode 03: how the company expanded in Brazil

In the late 1990s, few took seriously Luiza Helena Trajano’s plan to make Magazine Luiza a national company. The country’s main retailers — including Mesbla, Mappin and Arapuã — had just gone out of business, and Magazine was nothing more than a regional company, with stores in the interior of São Paulo and Paraná.

Despite the disbelief, in a few years the company entered the ranking of the three largest appliance retail chains. The strategies used and the challenges faced during this period are the subject of the third episode of the podcast From Zero to Top: SAGA Magalu. You can follow and listen to the program via ApplePodcasts, Spotify, Deezer, Spreaker, Google Podcast, Castbox, Amazon Music and other audio aggregators in the country.

One of the strategies that enabled Magazine’s growth in the 2000s began with the agility of the then commander of the group, Luiza Helena Trajano, in realizing that the retail scenario had changed and that it was necessary to give up short-term profits to grow in the long term. deadline.

“We had 100% of the financial profit and we invited a bank to take 50% of the profit in exchange for capital. At the time, my colleagues used to say: ‘you are crazy. Are you giving 50% of your biggest profit to a bank?’ But I said: ‘I won’t have the working capital to continue. In a little while, everyone will have to do the same, there won’t be much alternative’”, said Luiza Helena Trajano in an interview with the podcast.

The bank itself was Unibanco and the partnership closed in 2001 created Luizacred — the financial arm responsible for granting credit to consumers. The strategy, at the time seen as madness, was essential for Magalu not to have the same fate as Mesbla, Mappin and Arapuã. Those networks had broken years earlier in large part because of freeing up too much consumer credit and having to shoulder high defaults.

The partnership with Unibanco, which remains until today, left the company’s cash free for an aggressive strategy of acquisitions and opening of new stores. The company went from a turnover of BRL 520 million and 93 stores in 1998 to a turnover of BRL 3.4 billion and 444 stores ten years later. Check out the details of this rise and the company’s dispute with Casas Bahia and other major retailers in the podcast.

About From Zero to Top SAGA

Launched by InfoMoney in May 2019, the From Zero to Top has established itself as one of the largest entrepreneurship and business podcasts in the country. In weekly episodes, the program brought more than a hundred entrepreneurs and entrepreneurs such as José Galló (Lojas Renner), Guilherme Benchimol (XP Inc.), Alexandre and Anderson Birman (Arezzo), David Neeleman (Blue), David Feffer (Suzano), Traud Guida (Le Lis Blanc), Abílio Diniz, among others.

O From Zero to Top SAGA is a special series that will bring what is behind the big movements of the business world in narrated episodes. In this first season, the podcast team delved into one of the biggest stories of entrepreneurship and turnaround in the country in recent years: Magazine Luiza.

to tell the SAGA Magalu, the podcast covered about 1,700 km, interviewed more than 50 people, carried out 60 hours of recording and involved 11 professionals. The result is the 6 episodes published from August 18th, always on Wednesdays at 6pm.