Livraria Cultura reduces stores and creates subscription service to overcome crisis – Economy

Since 2015, when he started having financial problems, the Cultura Bookstore has been trying everything to survive. He even took over the operation of Fnac – receiving BRL 130 million in the process –, bought and sold the Virtual Bookshelf site, filed for bankruptcy protection, closed stores and renegotiated disputes with publishers. Under judicial reorganization for three years, the company was starting to stick its head out of the water in 2020, when it received the money from the sale of Estante Virtual. However, 15 days later the pandemic came, and the company found itself in difficulties once again.

Result: the judicial reorganization plan, handled by the office Felsberg & Associates, had to be redone – a new agreement was signed in June 2021. After resuming activities, last July, the president of Culture, Sergio Herz, says that the business seems to have finally found a new model to operate in the blue – despite the great growth of giants like Amazon in the pandemic.

In between the network’s bets for this new phase are the resizing of stores, the implementation of a system that guarantees payment to suppliers when the book is sold and the bet on a subscription club of R$ 14.90 per month.

Starting in November, the new “face” of Cultura stores will become more evident, says the company’s president, with the reopening of the Shopping Market Place unit, in São Paulo. They will be smaller stores, but with a service character: the idea is to help the customer find the book he is looking for, avoiding loss of sale due to inventory limitations.

The total number of units – which reached 15 in 2015 – was reduced to five. There are three left in São Paulo (Conjunto Nacional, Market Place and Iguatemi), one in Porto Alegre and another in Recife. In the restructuring process, Cultura left Curitiba, Salvador, Fortaleza and Rio de Janeiro.

The subscription club is another Herz bet. O Culture Pass allows the customer to take any book paying R$14.90 per month. If you return the work in 30 days, you can get another one. If the book is not returned, the member pays for the item with a 20% discount. The company also created a used book operation, the Sebum Culture. “We want the books that are sitting on people’s shelves,” says Herz.

In addition to the change in the business model, the network is counting on the resumption of book sales to put the business back on the path of growth. According to the National Union of Book Publishers (Snel), the sector grew 48.5% in volume and 40% in revenue in the first half of 2021, compared to the same period last year.

Another issue addressed by Cultura was the breakdown of stocks – without payment, many publishers stopped supplying the network. With the implementation of the automatic payment system, Cultura claims to have solved the problem. However, on a visit to the Conjunto Nacional store, the state found that there is still a lack of product. It’s not uncommon to see displays taken from DVDs or old books.

A market source said that publishers accepted the Culture’s recovery plan – which required discounts of around 80% in payments – because they have already incorporated the loss. “I don’t think anyone hopes to receive the Culture and Hail”, said the source.

Historic

Well known in São Paulo, Cultura began to take higher flights in 2009, when it sold 25% of its shares to the Mezanino fund, owned by Neo Investimentos. It was the password for the company to accelerate expansion, seeking national presence. The project did well until 2014, the year in which the company earned R$440 million. At the time, they even flirted with an IPO.

But then came the 2015 recession, which caught Culture in a fragile state – at the time of the first request for judicial recovery, in 2018, the debt already totaled R$ 285 million. Like rival Saraiva, which is also on the mend, the company bet on megastores, a model that proved to be unprofitable.

In the midst of all this long “saga” of difficulties, what is the lesson for Culture? Sergio Herz today sees “exaggerated and rapid growth with financial leverage” as the main mistake. In an attempt to finally turn the page, he says that one element is playing a key role: “Our suppliers. Without them, we wouldn’t be alive today.”

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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