Business

Brazil's retailer C&A takes advantage of pandemic pause to sharpen operations

The company is investing in logistical solutions that include changing the management system of its distribution centers, which should have its implementation completed by the end of the year

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  • C&A Brasil operates five distribution centers, one of which has a shared unit for physical and online store operations;
  • The company does not intend to follow large marketplaces such as Mercado Libre, B2W, and Magazine Luiza, which are venturing into increasingly broad product categories.

Brazil’s retailer C&A has taken advantage of the period of forced closing of physical stores caused by the peak of the pandemic to invest in the digitization of processes and logistics to be ready for the resumption of sales when the vaccination against COVID-19 is consolidated in the country.

At the same time that the retailer seeks to insert data analysis into all decision-making processes, it is investing in logistical solutions that include the replacement of the management system of its distribution centers, which should have its implementation finalized by the end of the year.

C&A Brasil operates five distribution centers, one of which has a shared unit for physical and online store operations.

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“There was a problem on the track that everyone had to walk more slowly and some had the opportunity to go to the pit and fix the car faster than others. This is the moment we are living in, ”said Milton Lucato, finance vice president of a fashion retailer.

With the update of the Distribution Center system, a strategy that accompanies the investment in logistics that is being implemented by major retail chains in the country, C&A Brasil expects to gain efficiency, being able to manage in real-time the inventory and employees.

The Distribution Centers of the State of São Paulo will be the first to adopt the new management system, WMS Manhattan Active Warehouse Management.

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The retailer also starts assembling robots from mid-year to automate functions at its distribution centers. The equipment will be able to bring items purchased by customers online to the order assembly table operator.

The new robot system will initially be implemented only at the company’s e-commerce distribution center located in the city of Cotia. The system is expected to be operational by the end of the year.

“At the end of the day, it is like a fitting of pieces … which will give more agility and better accuracy in understanding the demand”, said the company’s investor relations director, Roberta Noronha, also citing a reduction in the need for discounts and increased sales.

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Executives avoided making performance projections.

According to the executive, C&A is also expanding the implementation of tags with RFID technology (radio frequency identification) in its products, which it expects to finish in 2022. For 2021, the company seeks to have 50% to 60% of the product categories identified with the system. On average, according to C&A Brasil, the technology allows counting more than 500 pieces per minute, speeding up decision making.

The executive also mentioned that the company’s transportation division – which until 2020 had Brazil’s state-owned postal service Correios as its main logistics provider – is in the process of changing, with C&A Brasil bringing more partners to move its products.

“When the yellow flag goes out … you will see the speed,” said Lucato.

C&A Brasil, like other retailers with a strong physical presence, suffered last year due to lockdown policies, ending 2020 with a net loss of BRL 166.3 million and a drop of 22.7% in net revenue. The company currently has a network of 300 stores in the country. The last one opened in the city of Volta Redonda on Thursday.

Given the uncertainty about when the stores will reopen on a lasting basis, the company reprioritized resources to focus on omnichannel and improving services that allow customers to withdraw products purchased online. The company has also been following the trend of larger retailers and turning its stores into mini distribution centers.

But the company does not intend to follow large marketplaces such as Mercado Libre, B2W, and Magazine Luiza, which are venturing into increasingly broad product categories, said Lucato.

“We have hundreds (of salespeople) and we should have hundreds more as long as it is related to fashion and preferences. Fashion doesn’t just mean clothing, clothes, fashion has to do with everything around you, it’s a way of expressing yourself ”, he said.

Asked about the market rumors about merger and acquisition activity in the fashion retail industry, Lucato opted to just endorse the company’s position, that C&A Brasil remains intensely focused on the development of its business plans.

The speculation gained momentum after rival Hering announced that it declined the offer to acquire Arezzo and Lojas Renner, in an offer of primary shares that should significantly strengthen its cash position.

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