Topic-Innovation in Retailing in Various Countries

Topic- Innovation in Retailing in various countries.
Submitted by
Submitted to:
Anant Kumar Pandey
Ms Ashima Kapoor
Mba 4th sem

01315603913
I would like to explain it by two examples of Casas Bahia of Brazil and

Surtifruver of Columbia.
Casas Bahia of Brazil- Casas Bahia in Brazil has made home appliances
affordable to low-income consumers through installment plans that feature low
payments over long periods of time, a large assortment of products, fast delivery,
and convenient locations. Apart from these innovative features, Casas Bahia
customers also highlight the personalized treatment given to defaulters as a key
differentiator; unlike competitors that might automatically blacklist defaulters or
turn them over to a collections agency immediately, Casas Bahia builds loyalty by
being flexible and working with customers to find solutions.
Innovation, however, is not enough. Successfully innovative retailers have also
identified mechanisms to engage consumers, strengthening their emotional bonds.
Consequently, such retailers are seen as creating more value for their customers
and, in the long run, generating loyalty.
Casas Bahia has become an example to emerging consumers and other householdgoods retailers in Brazil of how to make high-ticket items affordable through easily
accessed, flexible, tailored credit. Casas Bahia is the leading household goods
retailer in Brazil; with approximately 430 stores in eight states, it is larger than its
five biggest competitors combined. Since 1999, its revenue (R$9 billion in 2004)6
has grown an average of 16 percent per year and revenue per store has grown an
average of 6 percent per year. In the last two years, those rates reached 28 percent
and 11 percent respectively. What is the companys recipe for success?
Casas Bahia engineered an effective risk-management solution and leveraged a
passbook model to sustain its sales-on-credit strategy. Credit granting follows a
very straightforward process: By simply collecting a document with proof of home
address and checking that the customer is not blacklisted by the SPC (Credit
Protection Service), sales assistants, who are trained on credit-profiling techniques,
are able to submit credit approval through an online central credit system. By
delegating processes, systems, and decision rights to salespeople, Casas Bahia has
brought speed and flexibility to credit approval. In general, customers receive
credit concession very quickly: immediately for values below R$600 if the name is
not blacklisted at SPC; one to two minutes for credit system approval; and up to 10
minutes for a credit analyst evaluation if credit is rejected by the system.
Casas Bahia understood that in order to sell to low-income consumers, the product
does not have to be cheap, as long as it is affordable: 90 percent of Casas Bahia
customers are from C/D/E social classes, and 65 percent have no formal job.
Currently, payments can be made in up to 18 installments for home appliances;
further credit is offered to those customers who have fully paid the last purchase;
and some debts can be negotiated, and divided in an even larger number of
installments.
This model is well-regarded by emerging consumers, whose comments included:
For the first time in my life, I was able to buy a laundry machine; It is a store
for low-income people; The payments are easier to manage; I work in the
construction business and nobody ever gave me the opportunity to buy something
in installments.
Once the customer finances the purchase, he has to go to the store every month to
pay the passbook, unless the client opts to add a bank fee. More visits result in
more opportunities to deepen the companys relationship with the customer.
Casas Bahia has invested in tightening emotional proximity and creating a feeling
of community with its customers. Most sales assistants are from nearby
communities,which helps leverage local knowledge and provide support to credit
decisions. Salespeople educate customers to buy in accordance to their budgets, in
order to prevent default and avoid customer. Store locations in low-income traffic
areas, such as near bus and metro terminals, combined with an IT-integrated credit
scoring and tracking tool, enable the format. As one customer mentioned, You can
find a Casas Bahia store anywhere.
Surtifruver: Surtifruvers value proposition is to provide high-quality fresh food

at market plaza prices in Colombia. This seven-store retailer has successfully
innovated by offering a large assortment of fresh, natural products at low prices. It
excels in managing a large supply base and has implemented a refined quality
control mechanism to guarantee the delivery of its value proposition.
During our fieldwork, we verified an advantage of 5 percent in its common fruits
and vegetables prices, compared to competitors. This low-cost strategy relies on a
low-cost organizationno advertising, no bar codes, and a very lean
organizational structure, with store managers reporting directly to the CEO and
salaries that are lower than multinational standards.
But that doesnt mean customer service falls behind. Around 60 percent of the total
workforce is dedicated to sales assistance and replenishment of goodsfrom
customer service at the entrance of every store to cleaning up and arranging goods
and is highly valued. One customer commented, I like Surtifruver not only
because of its products, but also because of the attention I got from the store
personnel.
On the other hand, in order to guarantee high-quality, fresh fruits, vegetables, meat,
seafood, dairy products, and flowers, Surtifruver has long-term contracts with
suppliers and must negotiate with up to four suppliers per product.
Fruit is examined before it is accepted for purchase, then cleaned and polished
before being displayed. Unfresh fruits and vegetables are taken away from shelves,
repacked, and sold in the back of the stores at very low prices. Customers
commented: I buy here because of the freshness and quality of the products;
You can be sure that the products here at Surtifruver are of the best quality; and
This store has an incredible variety and quantity of products.
Despite a modest dcor, Surtifruvers store layout affects the positive perception of
quality, confirmed by customers: I like this store because it is always clean and
quiet; The way products are displayed makes them look amazing.

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Topic- Innovation in Retailing in various countries.

Anant Kumar Pandey

Mba 4th sem

I would like to explain it by two examples of Casas Bahia of Brazil and

Surtifruver: Surtifruvers value proposition is to provide high-quality fresh food

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