CASAS BAHIA

 

Casas Bahia is the largest retail network in Brazil other being Magazine Luiza and Americanas. Casas Bahia has developed an innovative business model that serve the bottom of the pyramid population throughout Brazil. Their business model is a unique approach to customer service. Casas Bahia have 330 stores ,10 million customers and 20,000 employees.

It was founded in 1952 in Sao Paulo by a polish immigrant Samuel Klein who began his career as a peddler selling products to the migrant workers from the Brazilian Northeast.

The scope of Casas Bahia is that in Brazil they maintain a standard which stratifies the individuals into five economic classes A, B, C, D and E. From this C, D and E are considered at the bottom of the pyramid in 2002, the population of Brazil was 176 million, 84 percent of whom were at the bottom of the pyramid. The BOP represents a significant purchasing power in the Brazil. Specifically, 45 percent of total appliances and furniture spending is done by BOP.  Everyone in Brazil regardless of their age feels the need for entertainment, for poor in Brazil that comes in the form of radio and television. Seventy percent of Casas Bahia’s customers have no formal income, they are primarily maids, cooks and construction workers who have minimal wages.

Casas Bahia role is that they emerged by fulfilling the untapped financial needs of the Brazilian people. It has unique financing model that has enabled the company to serve BOP customers. While many companies saw Casa Bahia customers undesirable, they saw an opportunity in them. In order to serve the poor population, they developed an innovative approach that is pass book. Pass book allows to make small installments payments foe merchandise. The payment schedule is 1-15 months. The passbook is payable only at Casas Bahia stores. Every month the customers must enter the store to pay bills. SPC score is also an important factor, the score should be positive for further purchases.

COMPETITION

The competitive landscape of the retail industry in Brazil is constantly changing based on the product offerings, geography etc. With no new entrants, a large portion of the market share is concentrated with only few companies. The top five competitors comprise 45% of total retail sales. Casas Bahia remain the leader with 15% of the market. Recently large hyper markets like Carrefour , Extra and Big have entered the market , which poses threat to Casas Bahia.