Industry - Retail, Location - Brazil, Head Quarter- Sao PauloCasas Bahia

Slogan-Total Dedication to You

Introduction – Casas Bahia

• Largest non-food retail chain in Brazil

• Promoting luxury goods among lower

income groups

• Innovative installment scheme –

unlocked purchasing power

• Services providing :

–Credit

–Delivery &

–Installation of goods •

Background • 1952 – Samuel started earning by

selling blankets, bed linen and bath

towels to migrants (directional

marketing)

• Samuel Klein came up with an idea of

selling to BoP (1958)

• Opened his first clothing and

furniture store and named it -Casas

Bahia (Bahia houses)

• Empire grew further in 1994 (Real

plan by Brazilian Govt.)

• Real plan :

• Boost to purchasing power of

poor

• Helped Casas Bahia store to

spread his business

Facts

• Sales increased by 500% in six months (Real Plan)

• Stores kept on increasing at an average of 20 p.a. by

2002

• 2002 – CB recorded annual sales worth R$ 410

• 2004 – sales reached R$ 9b (50% growth as compared

to 2003)

• 2005:

• 30,000 employees

• 800 credit analysts

• 394 stores in eight states

• 11 million customers

Q & AQ. Unique features of Business Model and

Reasons of Success ?

A. Credit financing - core of CB Business Model

• Service of credit protection – credit bureau of Brazil->credit history customer

• CB - Credit Analysts evaluate customers• Series of Questions are being asked to assess

clients’ creditworthiness

• Centralized customer information

• Concept of passbook – Cross selling

• Comparatively low Default rate

Marketing StrategyStrategies

• Strong relationships

• Area specific

• Target - lower income group

• Visual Merchandising

• Credit financing

• Aggressive Marketing

• CB’s Yellow Card (automatic credit, symbol of status among working class)

• Identified the desire of luxury brands among the poor

• Pardoned debts of million customers

• Introduced “unemployment Insurance” (forgo first six installments)

Criticism leveled against Casas Bahia

Critics say:

•Exploiting the poor by selling the branded

products

•CB was luring Brazil’s poor towards luxury

items

•Playing with poor people’s psychology

•Prices of goods are being inflated

• Interest – free programmers were business

tactics

•Squeezed money by hiking actual price of

goods

Answer Casas Bahia’s view

Samuel says:

•His terms were comparatively generous

•Doing business with poor means more risk

•Role of sales personnel – selling a product which fits into budget

•He refused to be labeled as “low baller” – no compromise with the quality

Analysts say:

•CB kept consumer spending active during recession

•CB sets fine example for developing countries in terms of empowering poor

•Innovative credit financing schemes in developing countries

•To boost purchasing power and growth of economy

Casas Bahia- Sustaining Success

•By 2010, more than 500 stores in eleven states

•More than 55,000 employees

•Revenue 2007 6Bn $

•Brazil’s top advertiser in 2005.

•Among 250 largest Retail companies in the world-Current Position 131

•3062 trucks to stock the store and deliver the merchandise to the client

•Launched online store –Feb 2009 http://www.casasbahia.com.br

Continued..

•More than 22 million active customers

•80% of sales are from returning customers

•3.5 Millions Transactions Per Hour

•An open platform helped the company avoid US $8 million cost of proprietary solution

Bottom of PyramidThe poor of India - source of innovation

ITC-E-ChoupalBangladesh-Micro

Credit Market

Win -Win Situation

Thank YouAlok, Amit, Mandeep, Nikhil