Panel SA: C&A expands network of sports stores

ACE, C&A’s 30-year-old sportswear line, will become a new chain of stores with its own flag attached to the retailer’s units.

According to Paulo Correa, president of C&A in Brazil, ten units will be opened by December. Called double door, the model began to be tested a little over a year ago and today has three units, in Campinas, Fortaleza and São Paulo. The expansion consolidates ACE as one of the accelerated projects in the pandemic, which left changes in consumption habits, such as the increase in sports practice.

In the main flag, of C&A stores, 2022 closes with 17 new stores, compared to 27 in 2021, a setback that Correa attributes the interest. For 2023, according to him, the outlook is “cautiously optimistic”, with the prospect that interest rates will fall.

What are C&A’s expansion plans?At the IPO in 2019, we had studies to understand that there was room for more C&As in Brazil. At the beginning of the pandemic, we stopped, when no one knew what was going to happen. We held back the expansion, but when we became clear, we went back to the process.

We have opened almost 50 stores since the beginning of the pandemic until now. It was a significant move. In the pandemic, we think a lot about other alternatives for customer relationships and building bridges. Digital channels have emerged, such as WhatsApp, which still has a lot of potential.

And the other story was this issue of people’s care of their bodies and health. As a result, greater attention came to the subject of sport, not only at C&A.

We’ve had this ACE brand for over 30 years. It is a brand that has the name play with the letters of C&A and brings to the customer the dimension of fashion in sports, in which you dress up to go work out or do another activity, such as walking on the street, picking up the children from school, going to at the supermarket, be comfortable, but feeling good. There was room to create a higher level of assortment, with more space in physical stores.

The first move was to increase the area and assortment of ACE. In addition to the more fitness line, we started to bring others such as yoga, football, basketball, tennis. Until one day, at the end of 2020, when we thought about building an ACE store. We tested a double door with a store in Campinas. You enter the mall and see an ACE store next to a C&A store, with a walkway inside.

We went to see if it would work elsewhere and opened the one in Fortaleza, which was even stronger. In 2022, we opened at Anália Franco, in São Paulo, with another audience, and it worked. Now, let’s open ten by the end of the year. We understand that the formula works.

What was ACE’s participation before and what will it look like?Sales per square foot of the ACE brand pre-double door versus post-double door doubled. When we put twice as many meters, then, we are talking about up to four times the revenue of that sports line in the space after the inauguration.

It grew for several reasons, such as the location of the sports area at the door of the store, the themed ambiance, the differentiated level of service and a quick shopping experience.

And how is this double door replicated in digital?It is possible to do a double door on the website or in the app. But it is not the same because the level of differentiation is lower than in the physical store. On the website it is more difficult to create this different experience. What we are doing is more on WhatsApp, sending content.

like mr. have you seen the economic scenario and what do you foresee for the coming year?We know the current scenario is challenging at the macro moment. With this level of interest, it punishes the consumer too much in the balance of the budget. High interest never combined with high consumption.

For me, the most important thing is the trend. As C&A, we have a cautiously optimistic view, which is the concrete perspective that interest rates will fall. They have reached a maximum, inflation is starting to subside and there is room for us to see this expectation drop. This is very important for consumption, for retail.

I’m looking at 2023 in that context. Cautious because it won’t go down that fast. What we read and hear is a lot for the second half of 2023, this story of interest starting to fall. Until then, what we are seeing are these stimuli that help in the short term, but structurally this dimension of interest needs to happen.

Our strategy, our plans, are not semiannual. We do annual and five-year. And we continue to strongly believe that C&A will continue its path of store expansion in Brazil. We continue to invest in the digital dimension, in our C&A Pay card credit and distribution path.

In C&A brand stores, did the number of open units drop from 27 in 2021 to 17 in 2022 because of the economic context?It has to do, mainly, with this interest dynamics. With high interest rates, projects need a higher barrier to pay.

When you have a lot of uncertainty with regards to the cost of capital, not all projects become viable that quickly. So you slow it down a little bit and select the ones you believe have the most return speed. And then when interest rates drop, you can bring in a little more.

X-ray

Graduated in production engineering from the Federal University of Rio de Janeiro, he has an MBA from The Fuqua School of Business, Duke University (USA). He assumed the presidency of C & A in Brazil in 2015. He joined the retailer in 2004 as director and assumed the commercial vice presidency in 2007, during which time he launched the chain’s ecommerce in the country.