Leroy invests US$ 571 million to double size
Valor Econômico
"Do you know the story on the ax and the tree?" asks the French Alain Ryckeboer, managing officer of the construction materials retailer Leroy Merlin in Brazil. "There are lumbermen who go out for trees with a bad ax and spend nine days doing so", he says. "We rather spend nine days sharpening the axe to cut all the trees at once". The analogy explains the absence of Leroy Merlin in e-commerce. The channel is not operated by the French multinational anywhere in the world, but Brazil should take the lead beginning the online sales within a year, from a project that begins being outlined by the WMcCann agency. Today, among the large construction materials retailers, only the Alpha group C&C makes online sales.
The debut in e-commerce is only part of the plan of the French multinational to strengthen its presence in the country, where it is the leader since last year. By 2014, nearly R$ 1 billion (US$ 571.4 million) shall be invested in the opening of 20 stores, which will more than double the size of the retailer in the country. Besides the openings and the beginning of the online sales, the capital will be invested in the reform and enlargement of the current 19 stores, so as to better accommodate the mix of 60 to 80 thousand items, which is renewed by 25% every year.
The French officer, who is ahead the operation since Leroy's arrival in the country, in 1998, complains the National Development Bank (BNDES) does not lend money to building materials retailers of foreign capital. Even without the public money, the bet of Leroy Merlin in Brazil is high. The country ranked fourth this year in the ranking of nine countries of the French multinational. Until 2009, it was in sixth place. Today, it is only behind the French headquarters, and Spain and Russia. "But no place will grow at a two-digit rate this year like Brazil, where the income should increase by 30%, the same rate of the three last years", says the Executive.
The 20 stores that should be opened until the end of 2014 will be concentrated in the States of the South and Southeast, the same regions where it is present today (in six States and in the Federal District). "There is demand in the Northeast, but it is difficult to overcome the long distances with the difficulties with infrastructure in the region", says Ryckeboer. According to him, 95% of his suppliers are based on the Southeast. This year, Leroy intends to open three points of sale in Taguatinga (DF), Campinas (SP) and the north side of São Paulo, near the Center Norte shopping mall. The stores have to be large, since each unit works with its own stock, and they insist on featuring decorated rooms to the customers.
In 2009, Leroy Merlin overcame C&C among the biggest construction material retailers of the country and became the leader in the ranking of the sector, according to a survey made by the magazine of the National Association of Construction Material Retailers (Anamaco). It dethroned a nine year reign of the Brazilian C&C, which ranked third after Saint-Gobain, owner of Telhanorte. Since last year, the sector is being favored by the reduction of the IPI rate (Excise Tax) on the building materials, a measure that was extended and will be in force until the end of 2010.