Retail should face more merger operations
DCI
The retail chain Magazine Luiza should react to the most recent mergers that have occurred in its segment: according to market sources, it seeks a partner, such as, for instance, the centenarian Pernambucanas, or even Lojas Colombo. The companies deny, but everything indicates the dispute in the retail of electric and electronic devices will be even fiercer with the new wave of mergers that is being outlined by the market.
While the chain of businesswoman Luiza Trajano might be seeking a way to make the deal feasible, the rival Ricardo Eletro took a faster action and entered into a partnership with Bahia-based Insinuante. The merger has created the Maquina de Vendas (Sales Machine, in English), a retail chain that is born with 528 stores and estimate earnings of R$ 5 billion (US$ 2.8 billion) this year. In the "musical chairs", the chain is in second place among the leaders of the segment, because it has, at least temporarily, surpassed Magazine Luiza, with 456 units and earnings of nearly R$ 3.8 billion (US$ 2.1 billion). According to the President of Ricardo Eletro, Ricardo Nunes, one of the focuses of the new company is to get to the São Paulo market, without ruling out another association, even with the chain owned by Luiza Trajano.
Left behind for the second time, Magazine will have to be agile so as not to lose market, since it saw, for the third time, the competition leaves it behind; twice Grupo Pão de Açúcar (Companhia Brasileira de Distribuição - CBD) moved in advance: as it acquired Ponto Frio, last June, and as it joined Casas Bahia, in December. According to Professor Nuno Fouto of the Retail Program of Administration (Provar), the market is becoming increasingly more concentrated in the hands of the major players, and he believes the possibility of a union between Magazine Luiza and Pernambucanas is a good alternative to give new impetus to the chain, in the dispute for the end consumer. "Seeking Pernambucanas is feasible and interesting because it would give the chain more capillarity", he explains.
Fouto believes that another alternative for Luiza Trajano is to join the new group and provide the structure it needs to enter the market of São Paulo. "For their project of entering in São Paulo, they have to join or acquire someone. Therefore, a merger with Magazine Luiza is also interesting", says Professor who completes: "One thing is certain: Magazine Luiza now has to make a move".
Another one who sees the moment as essential for a move of the São Paulo chain is the consultant Lucas Copelli, managing partner of Vallua Consultoria e Gestão. "They have to get together with Pernambucanas or Lojas Colombo; but I think it is also interesting to join this new player of Ricardo with Insinuante", he says. Through its press office, Pernambucanas says there is no possibility of a merger with the chain of Luiza Trajano; as for Magazine Luiza, it does not rule out partnerships, and it said, on a note sent to the DCI yesterday that "associations and mergers in the segment of electric devices are expected" and that "it continues with its expansion plan and it is also open to analyze proposals of acquisition from other chains, but there is no negotiation underway".