Cover story: How the 80 m² store became the the largest chain in the North-Central of Brazil
by Leda Cavalcanti
The history of Novo Mundo began with the entrepreneurship of Luziano Martins Ribeiro, from Tupaciguara, Minas Gerais, who opened an 80 m² store in the city of Goiânia (GO). He was responsible for all the work, from purchasing to accounting, and his day would only come to an end after he delivered, with his cart, what he had sold. He was already doing post-sales. The business grew and went to other cities in Goiás, Tocantins and Distrito Federal. In 2011, there were 100 stores. Seeing opportunities in the North-Central region of the country, he advanced to Maranhão, Pará, Amazonas and Roraima.
Today, the chain, which is part of a group that operates in several areas, such as agribusiness, industry and wholesale shopping, has 143 stores, six distribution centers and three warehouses. The goal is to reach the end of this year with at least 163 points of sale. In 2021, it invoiced R$ 1.3 billion. The expectation for 2022 is to be close to R$1.5 billion. “Brazilian retail has always been a hotbed of opportunities, and today they are even greater,” says, in this interview with Eletrolar News, CEO José Guimarães, who led the company’s digital transformation.
How does the chain evaluate its years in the market?
José Guimarães – Novo Mundo has many historical milestones in its trajectory. It was a pioneer in the Midwest in credit sales and one of the first in the segment to implement e-commerce in 2002. Since 2015, it has operated in a multichannel manner. In 2019, when I took over as CEO, my main goal was to transform the business model and strengthen the pillars of professional management. But it was in 2020 that the digital transformation happened in 100% of the stores, making the total integration of the physical with the digital. This made Novo Mundo the first company in Brazil to break the physical and digital barriers by offering the same price on the website and in the stores.
“The saying that one dissatisfied customer tells 10 others has never been truer. Today, he measures companies by their level of satisfaction immediately.”
Did the transformation cover the entire company?
JG – It permeated all areas, such as, for example, the integration of store and distribution center inventories so that any channel could provide immediate deliveries to customers. Since 2018, we have our own sales app and results tracking app. Besides the business areas, we are implementing internal processes using RPA, and our HR area already uses AI in recruitment processes. In 2020, we will invest R$ 20 million in the transformation, and in 2021, another R$ 50 million. Today, all of our stores are truly multichannel.
In addition, we have a robust marketplace. There are almost 1,000 regional and national sellers, strategically positioned to complement our mix. I would like to highlight our unique concept of a complete solution for consumers. We offer in our sales channels the installation of all the products we sell, such as air conditioning, dishwashers, and closets, for example. Other milestones in our operation consist of mass-market insurance and the offer of financial services, as a way to ensure an amazing buying experience for customers.
What was the other important change?
JG – It was the new brand repositioning signed by the agency Ana Couto and aligned to the purpose of “Surprise every moment, celebrate every conquest”. The changes highlight the company as a reference in the industry and introduce the name novomundo.com to consumers through a light and modern look. They reinforce our commitment to proximity, security, and transparency
“By 2025, the goal is to be present throughout the Northeast and reach the state of Minas Gerais, including the capital Belo Horizonte.”
Did this work get recognized?
JG – We have relevant certifications and awards, such as the Reclame Aqui (complain here) quality seal, the RA1000, GPTW (Great Place to Work) Midwest award, Maranhão, and the FIA FEEX (Institute of management Employee Experience Foundation) organizational climate quality certification. We are recognized for good people management practices via a corporate university, accredited by entities such as the Brazilian Association of Human Resources (ABRH) of Goiás. We are active in ESG (Environmental, Social and Governance), under the pillars of the first job, offering hundreds of vacancies and access to university for young people aged 18 and up.
What was the revenue in 2021? What is this year’s expectation?
JG – In 2021, we billed R$1.3 billion, 40% of which came from the digital channel. Our expectation, in 2022, is to reach close to R$1.5 billion.
How many stores and distribution centers does the chain have?
JG – We have 143 stores, located in the states of Goiás, Amazonas, Pará, Roraima, Tocantins, Mato Grosso, Maranhão and Bahia, as well as in the Federal District. We have six distribution centers in Goiânia, Brasília, São Luís, Belém, Manaus and Cuiabá and three warehouses in Palmas, Santarém and Boa Vista. We are the largest retailer in the North-Central region of Brazil. We have 2,500 employees, of whom 1,100 are first-job consultants, and a policy of profit sharing up to the level of corporate managers.
How many and which products are sold?
JG – There are more than 300,000 items, such as electronics, furniture, cell phones and appliances, forming an ecosystem that includes e-commerce, marketplace, fulfillment and a full-time seller center to serve all partners efficiently. Furniture, housewares, and laptops represent 30% of sales. The white and brown lines plus telephony account for 70%.
What are the differentials that have led the chain to be the largest in the region?
JG – Novo Mundo has never stopped in time, has always invested in technology and followed the retail and consumer transformations. We transformed the traditional retail, which has delays, queues and a multitude of frictions in the service, into a fast experience, completer and more surprising. Another important point is that we always take care of our employees, whether by encouraging career development through the corporate university, for example, or with other actions that make them choose Novo Mundo to work. This reflects 100% in the final customer
Is the Midwest a good market?
JG – The Midwest is the cradle of the company, we grew here to win other markets, but it is worth noting that, according to GfK data, the region accumulates in the first two months of 2022 a growth of 1.1% in our retail segment, and novomundo.com grows above 20%. This indicates that we are gaining share in our main region of operation.
“Regional retailers, for the most part, have models that are focused only on the profile of that market and end up restricting their strategic options. Because of this, they are unable to scale and remain more restricted to their regions, without moving on to other markets.”
What is the motivation for this growing digital process?
JG – When we started our digital transformation two years ago, we understood that we needed to show our competitive differentials so that Novo Mundo could leave conventional retail and become truly multichannel. The whole process of technology, changes, and transformations had as a first necessity to transmit our vision. To have different products, physical and online stores integrated with the same pricing and payment methods. The last two years were of intense transformation. We needed to change the model by creating a digital culture without losing the essence of a company that has always valued an emotional connection with the consumer and the employee. We needed to be much more productive, because the reduction of operational cost was decisive for our success. Deep changes in processes, technologies, management tools, and training were implemented. The company is much more prepared for this new retail, which has, besides the frictionless physical store, a robust marketplace and an ecosystem prepared to support customers and partners with world-class pro ducts and services. We now have consistency for digital expansion strengthened by a team extremely engaged with our vision, which simply plans, creates, and implements actions focused on our business.
Which innovations were most important? Is the sales consultant an example?
JG – Among them are the changes from analog to digital, from traditional customer service to consultants who provide customer service via smartphones, self-service totems, delivering complete solutions and realizing significant operational cost reductions. The sales consultant emerges in this context to look at the customer’s needs and not to “push” items that they don’t need. Our consultant is trained to provide a different buying experience, to look at the customer’s journey in the store. From first contact to product pickup, he talks to a single person. And the technology behind it helped us to streamline the process, bringing even more agility to the journey. The first 100% multichannel concept store was opened in March 2020, one week before the lockdown. Since then, we have received nothing but positive feedback from our customers.
Who is the post-pandemic consumer?
JG – He is much more attuned, questioning, and seeks to fulfill his wishes and needs, regardless of the service channel, and in a much more incisive manner. If they are not served as they would like, they take a stand both on social networks and on traditional communication channels. The saying that one dissatisfied customer tells 10 others has never been truer. Today, he measures companies by their level of satisfaction immediately.
“Today, 86% of our deliveries take place within 24 hours. We are in the Center-North of Brazil and with stores in several cities in the interior of these states.”
How do you evaluate the Brazilian retail market?
JG – Brazilian retail has always been a storehouse of opportunities, and now they are even greater. A large part of this is due to the fact that most retail companies find themselves at a crossroads, regardless of their size. How to position themselves, which way to go, what trend to aim for, these are recurring questions. Most companies do not create their own identity, they prefer to copy and follow the herd effect rather than try to create something unique and innovative. I believe that those who differentiate themselves in a true and authorial way will grow in this market.
What are the biggest challenges for regional retail?
JG – Regional retailers, for the most part, have models that are focused only on the profile of that market and end up restricting their strategic options. Because of this, they are unable to scale and remain more restricted to their regions, without moving on to other markets. We believe that our model creates a true emotional connection with customers and employees, regardless of region, and is therefore scalable. This is why we have grown in the eight states where we operate.
Does the chain intend to expand its physical stores and go into new regions?
JG – Novo Mundo will reach at least 163 stores this year and should start opening more units in the Northeast from the second half of 2023, which should double the size of the company in the coming years. By 2025, the goal is to be present throughout the Northeast and reach the state of Minas Gerais, including the capital Belo Horizonte.
Is the retail trend toward smaller stores? For what reason?
JG – This is linked to the business model and the strategic option of each organization. In our case, the option is to have stores with an average of 600 m², far from our average until 2019, which was over 1,000 m². Of this total, 200 m² are for storage, which is possible with good ambiance, self-service totems in the stores, and 300 thousand items on the website, which can be accessed via cell phone
How much does digital represent in the company’s total sales?
JG – Today, digital represents 40% of sales. The channels complement each other, and the store still has a great importance, because the client wants to see the product live, to be able to test it – which, with the internet, is not possible yet. I don’t see physical and digital as competitors. So much so that we will continue investing in our marketplace to make it even more surprising, with logistics integrated to our seller, applications, omnichannel and digital credit on social networks, where the customer can apply for credit on any purchase channel.
How does the company see the year 2022? What is the expected investment?
JG – We have an approved Capex of R$ 25 million, which may be increased according to the current year’s result projections. Our focus is on the evolution of our app and website, expansion of the number of stores, and finalizing the change from our ERP to SAP. Our plan is to exceed the 2022 budget, as we met our sales, growth, and net profit targets for the first quarter. We grew 22% over the same period last year.
What are the logistic challenges that retail faces?
JG – The customer wants to receive quality and delivery in the shortest amount of time. That is why we expanded our distribution centers and strategically installed these units so that we could shorten delivery times. Today, 86% of our deliveries take place within 24 hours, remembering that we are in the Center-North of Brazil and have stores in several cities within these states. We also have an express delivery service, which takes up to two hours, and we make our store stocks available for immediate pickup after the purchase in any channel.
How does the chain prepare to face the next retail challenges?
JG – Primarily, we have to be humble and recognize our limitations and wit that, position ourselves along with our team so we are more creative and efficiency. Only with a lot of creativity and efficiency we can be ready to climb up the national and major marketplaces, without losing our pillars that connect us to our roots with clients and collaborators so we become the best choice at the purchase decision time.
Source: Eletrolar News Ed. #148
