Livraria Cultura cuts stores and creates subscription service to overcome crisis

Since 2015, when he started having financial problems, the Cultura Bookstore tried everything to survive. He even took over the operation of Fnac – receiving BRL 130 million in the process -, bought and sold the Virtual Bookshelf site, filed for bankruptcy, closed stores and renegotiated disputes with publishers. Under judicial reorganization for three years, the company was starting to take its head out of the water in 2020, when it received the money from the sale of Estante Virtual. However, 15 days later the pandemic arrived and the company found itself in trouble again.

Result: the judicial reorganization plan, managed by the office Felsberg & Associates, had to be redone – a new agreement was signed in June 2021. After the resumption of activities, last July, the President of Culture, Sergio Herz, claims the company seems to have finally found a new model to operate in the blue – despite strong growth from giants like Amazon in the pandemic.

Between the network’s bets for this new phase are the resizing of stores, the setting up of a system guaranteeing the payment of the suppliers during the sale of the book and the bet on a subscription club from R $ 14.90 per month.

From November, the new “face” of Cultura stores will become more evident, said the president of the company, with the reopening of the Shopping Market Place unit in São Paulo. They will be smaller stores, but with a service character: the idea is to help the customer find the book he is looking for, avoiding loss of sales due to stock limitations.

The total number of units – which reached 15 in 2015 – has been reduced to five. There are three left in São Paulo (Conjunto Nacional, Market Place and Iguatemi), one in Porto Alegre and another in Recife. In the restructuring process, Cultura left Curitiba, Salvador, Fortaleza and Rio de Janeiro.

The subscription club is another Herz bet. O Culture Pass allows the customer to pick up any book by paying R $ 14.90 per month. If you return the work within 30 days, you can get another one. If the book is not returned, the member pays for the item with a 20% discount. The company has also created a used books operation, the Sebum Culture. “We want the books that are on people’s shelves,” says Herz.

In addition to the change in economic model, the network is counting on the resumption of book sales to put the company back on the path to growth. According to National Union of Book Publishers (Snel), the sector grew by 48.5% in volume and 40% in turnover in the first half of 2021, compared to the same period last year.

Another issue that Cultura tackled was out of stocks – without payment, many publishers stopped supplying the network. With the implementation of the automatic payment system, Cultura claims to have solved the problem. However, during a visit to the Conjunto Nacional store, the state found that there is still a lack of product. It is not uncommon to see displays taken from DVDs or old books.

A market source said the publishers agreed to Culture’s stimulus package – which required discounts of around 80% on payments – because they’ve already factored in the loss. “I think no one hopes to receive Culture and HailThe source said.

Historical

Well known in São Paulo, Cultura started to take off in 2009, when it sold 25% of its shares to the Mezanino fund, owned by Neo Investimentos. It was the password for the company to accelerate its expansion, seeking a national presence. The project worked well until 2014, when the company earned 440 million reais. At the time, they even flirted with an IPO.

But then came the recession of 2015, which took Culture into a fragile state – at the time of the first judicial recovery application, in 2018, the debt was already 285 million reais. Like its rival Saraiva, also on the mend, the company has bet on megastores, a model that has proven to be unprofitable.

In the midst of all this long “saga” of difficulties, what is the lesson for Culture? Sergio Herz today considers “exaggerated and rapid growth with financial leverage” as the main mistake. In an attempt to finally turn the page, he affirms that one element plays a key role: “Our suppliers. Without them we wouldn’t be alive today.


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