Strategy and Competitive Advantages

The gradual economic recovery throughout the year, the improvement of the processes for product development and collection, the improvement of the logistics flow throughout the entire chain and the resumption of financial transaction volumes were the Company’s main operating highlights. As a result, a consistent expansion of same-store sales coupled with a strong expansion in gross merchandise margins and strong control over the financial cycle.

The new distribution center in Guarulhos was finished at the end of 2016 and gave the Company the most advanced technology worldwide. Riachuelo, being even more confident in its business model, maintained its expansion process by opening 12 stores and renovating 20 units in 2017, ending the year with 302 stores in operation.

The search for productivity gains continued throughout 2017, with more focus on store processes. The development of management methods implemented in stores during 2015 and 2016 continued to generate value through the improvement of the quality of operations and the consequent increase in productivity, only slightly affected during the second six-month period by the growth of mobile phone and perfumery operations. As such, the indicator sales area (m²) per employee has increased by 38.1% over the last four years.

Estratégia

Riachuelo kept its proposal to democratize fashion, offering pieces with designs at affordable prices for customers all over Brazil. The influential Lala Rudge developed a capsule collection in 2015 and, since June of this year, she has her own lingerie brand for sale exclusively at Riachuelo. The Barbie line has been one of Riachuelo's main licensed lines since 2016, and an exclusive collection created by Lala Rudge and the retail team has brought together pieces that are ideal for many of the routine moments of the modern women, from going to the gym, training outside and even a relaxed meeting with friends, reinforcing the Athleisure concept, which unites fashion and sport.

Another partnership made in 2017 was the Camila Coelho and Kadu Dantas collection. In this collection, shades of black and wine predominate, the inspiration came from a blogger’s closet, the Kadu collection was also inspired by his own wardrobe.

In November 2017, designer Paula Raia launched her first and exclusive partnership with Riachuelo. Mid-length skirts, bodysuits, dresses and trousers in shades of off white, black, skin and indigo. It is worth mentioning that the performance of these commercial partnerships goes beyond the enormous success achieved in their sales. Getting a fashion image with an increasingly attentive and conscious young public with regard to ecological and social aspects is a great asset generated by such strategies.

In relation to the financial transactions, the Company gradually accelerated its operations, generating higher volumes in 2017, given a macroeconomic scenario that is beginning to show signs of recovery.

As a recognition of the quality of financial information disclosed to the market in general, Grupo Guararapes received the 2017 Troféu Transparência Award for the fourth consecutive year and was chosen as the best among the companies awarded in its category. Awarded by Anefac (National Association of Finance, Administration and Accounting Executives) in partnership with FIPECAFI (the Foundation Institute of Accounting, Actuarial and Financial Research) and Serasa Experian, the 21st Troféu Transparência Award recognized the best financial statements in the market.

For 2018, the main macroeconomic factors indicate an improvement in consumption levels in Brazil. Coupled with a better macroeconomic situation, the company is much more confident in its business model that has been showing consistently strong results since the end of 2016.

The intensification of the fast-fashion concept developed and implemented over the last few periods has been the main factor behind the sales performance in same stores and the increse in gross margin seen. The focus now is to maintain consistency. In terms of productivity, the company will continue to seek even better levels of productivity in its stores and management method and process redesign has been a strong ally in the pursuit of generating value on these fronts.

In the field of fixed asset investments, the company should maintain its current pace of expansion and focus on a greater number of renovations.

  • Mission: to provide people with an opportunity to express themselves through Fashion.
  • Vision: to be the leader in Brazil’s apparel market, in a predominately formal industry.
  • Values: Ethics and Respect; Financial Solidity; Administrative Austerity; Meritocracy; Continuous Improvement; Social Responsibility; Customer Service; Corporate Governance; Selling Attitude.

Last Update on June 4, 2018

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