(Bloomberg) — Frederico Trajano helped turn the brick-and-mortar appliances retailer his family created in the 1950’s into a Brazilian e-commerce powerhouse.
Now, he’s looking to transform it again.
Trajano, 45, spearheaded the purchase of 20 smaller firms over the past year by Magazine Luiza SA, the $15 billion retailer his family controls. Targets included everything from financial technology startups and food-delivery firms to artificial intelligence companies or a website catering to geeks.
“We want to make Brazil digital, like we’ve made Magazine Luiza digital,” said Trajano, chief executive officer at the Sao Paulo-based retailer, in an interview with Bloomberg Television’s Shery Ahn. “When you look at e-commerce in Brazil, even after the Covid crisis, it’s only 10% of retail. So e-commerce in Brazil will grow no matter what, even if GDP doesn’t grow.”
At Magazine Luiza, e-commerce already accounts for almost 70% of revenue, Trajano said. He’s hoping the strategy will help offset meager growth in the nation.
Brazil has once again been thrown into turmoil, with soaring food and fuel prices leading Jair Bolsonaro’s unpopular government to try to increase social spending ahead of a re-election bid next year, while bypassing key fiscal rules in the process. Interest rates have shot up and growth prospects are dwindling, with some economists already seeing a recession in 2022.
Watch Generation Next: Magazine Luiza’s Frederico Trajano
“I don’t spend a lot of time with macro prediction. For Brazil, it’s useless because it’s such a volatile country,” Trajano said.
The worsening prospects for Brazil’s economy have weighed heavily on Magazine Luiza shares, which are down 52% year to date, after soaring in 2020. The company also faces increased competition in the nation from Amazon and MercadoLibre.
Among recent initiatives, Magazine Luiza is selling financial products to the other retailers connected to its marketplace, thanks to recent acquisitions, he said. Trajano’s endgame is to make the firm into something similar to China’s ubiquitous business conglomerates, like Alibaba Group Holding Ltd. or Tencent Holdings Ltd., companies that have “a broader business model, but very focused on single country,” he said.
While he’s once again trying to revamp Magalu, as the retailer is known in Brazil, he wants to do so without changing the company’s “open-minded feminist soul.”
“We were founded by and led by women for like 40 years, it’s very atypical for Latin America,” Trajano said. The company is named after Luiza Trajano Donato, Frederico’s great-aunt, who helped found it. His mother, Luiza Helena Trajano, is currently chair of the board, after a long stint as CEO.
“Most of my success comes from what I learned from both Luizas, the kernel of our business culture,” he said.
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