Frederico Trajano helped transform the home appliance retailer founded by his family in the 1950s into an e-commerce giant in Brazil.
Now, Trajano wants to transform Magalu once more.
Trajano, 45, led the purchase of 20 smaller companies last year by Luiza stores (MGLU3). Targets included fintechs, food delivery companies, artificial intelligence startups and a platform geared towards the geek audience.
“We want to make Brazil digital, just as we made Magazine Luiza digital,” said Trajano, CEO of the retailer, in an interview with Bloomberg Television.
“When you look at the e-commerce in Brazil, even after the Covid crisis, it represents only 10% of retail. Therefore, e-commerce in Brazil will grow anyway, even if the GDP does not grow.”
At Magazine Luiza, e-commerce already accounts for about 70% of revenue, said Trajano. He hopes the strategy will help offset Brazil’s weak growth.
The country is once again facing a turbulent period, with rising food and fuel prices and the attempt by the president Jair Bolsonaro to raise emergency aid before seeking re-election in 2022, but circumventing the spending ceiling.
Interest rates have soared, and growth prospects have been revised down, with some economists already forecasting a recession in 2022.
“I don’t waste a lot of time with macro forecasting. For Brazil, it is useless, because it is a very volatile country”, said Trajano.
The most negative scenario for the Brazilian economy has weighed on Magazine Luiza’s shares, which have accumulated a drop of 52% in the year after the jump in 2020. The company also faces greater competition from Amazon and the Free Market.
Among the initiatives, Magazine Luiza is selling financial products to other retailers connected to its marketplace, in the wake of recent acquisitions, said the executive.
Trajano’s goal is to transform the company into something akin to China’s ubiquitous conglomerates such as Alibaba or Tencent, companies that have “a broader business model, but very focused on a single country,” he said.
As he tries once again to reshape Magalu, Trajano wants to drive the strategy without changing the company’s “open-minded feminist soul”.
“We were founded and led by women about 40 years ago, this is very unusual for Latin America,” said Trajano. The company is named after Luiza Trajano Donato, Frederico’s great-aunt, who helped found the retailer. His mother, Luiza Helena Trajano, is currently chairman of the board, after a long period as CEO.
“A large part of my success comes from what I learned with the two Luizas, the core of our business culture,” he said.
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