As of December 31, 2018, Centauro had 16 G5 stores, in addition to having all of its stores operating as mini distribution centers, allowing clients to purchase products online with the option of in-store pickup and also sending products from stores to the clients who purchased online.
In 2018, the digital platform accounted for 16.0% of total sales and increased by 41.2% compared to the previous year. The results we achieved suggest that the omnichannel creates value for clients: sales generated from modalities that integrate all our channels accounted for 12.1% of digital platform revenues in 2017, jumping to 37.3% in 2018.
In 2017, the first generation 5 stores (“G5”) were launched, a new concept that enables physical stores to leverage on the omnichannel advantages, with several innovations designed for clients to have instore experiences that are not available on the digital platform.
In 2016, aiming to provide clientes with a more complete shopping experience, the Company traced a new strategic plan to connect people and sports through its platform, offering products, services, information and experiences. Among the actions taken to develop and strengthen such strategy, was the integration of inventories and operations through systems and processes that transformed Centauro into a true omnichannel company.
In 2015, the Company carried out an operational restructuring with strong focus on reducing expenses and improving margins, which resulted in a substantial increase in productivity.
In 2014, Centauro was the official sponsor of the 2014 FIFA World Cup in Brazil.
Centauro invested even more in its digital platform. As a result, a new Distribution Center was opened in Jarinu/SP, expanding the operating area to 59,809 m², when considering alll the Company’s distribution centers.
In 2012, when Centauro already had 233 physical stores, its founder, who owned 100% of the Company’s capital, began to think about attracting an investment partner to continue the chain’s growth plans. Bomfim decided that the private equity fund GP Investments (“GP”) would be the ideal partner due to the alignment with GP’s principles with the Company’s principles (such as the appreciation for meritocracy) and the fund’s wide management experience, including in the retail sector.
In July 2009, when the first store was opened in the state of Amazonas, an important step was taken towards an expansion process, confirming the Company’s physical presence in all five of the country’s regions.
In 2003, when the Company was present in more than 10 cities in Brazil, the digital platform was launched through the www.centauro.com.br website to serve consumers nationwide.
In 2000, while visiting a newly opened book Megastore, Bonfim realized that in a country where people were passionate about sports, there was an opportunity to replicate this megastore concept for the sports market. At first, mall administrators were reluctant to the idea and to rent nearly 1,000 m² for a sports Megastore, a concept that was unheard of in the country at that time. However, after many conversations, the first megastore model was opened at Shopping West Plaza, in the city of São Paulo/SP.
The recorded sales of the new store indicated that the megastore model was a success and mall administrators started to show interest in including Centauro in their portfolio. Thus, Centauro stores with the megastore format began to expanded across Brazil.
The Company’s story began 38 years ago when its founder, Sebastião Vicente Bomfim Filho, realized that Brazilians were beginning to adopt the habit of exercising regularly but there was a lack of sports retailers to meet the growing demand. With this in mind, in April 1981 Cenaturo opened its first store in Belo Horizonte (Minas Gerais) with a very modern concept compared to the other existing sports stores.
Centauro is Latin America’s largest sporting goods retailer according to information published by Euromonitor International in 2018 and achieved the highest brand awareness ranking among sporting goods retailers in Brazil according to a 2017 study by Provokers. It operates through an omni-channel and multichannel platform that is integrated in order to provide the best shopping experience to customers.
The Company has been present in the Brazilian retail market under Centauro brand for 38 years. Over this period, it developed its sporting goods megastore business model and currently has 192 stores located in Brazil’s shopping malls distributed over 97 cities in 23 of Brazil’s 26 states and in the Federal District, the majority of which are located in Brazil’s largest shopping malls according to ABRASCE. Physical stores generated 84.0% of total net sales in 2018 (compared to 86.9% in 2017 and 88.4% in 2016).
The sporting goods retail sector in Brazil is widely dispersed, generating approximately R$33.2 billion in sales in 2017. From 2012 to 2017, the Brazilian sporting goods retail sector grew at an average rate of 5.3%, compared to an annual average growth rate of 3.4% for the traditional Brazilian retail sector as a whole over the same five-year period according to 2018 Euromonitor International data.
In 2018, the Company had an estimated 5.5% market share of the Brazilian sporting goods retail market based on its net sales from physical stores compared to 5.2% and 4.9% in 2017 and 2016, respectively.
Digital platform of the Company can be accessed through website (mobile and desktop) and mobile application. In line with retail segment trends, Company launched the website in 2003, which facilitated the dissemination of brand and products throughout Brazil. In 2018, 34.6% of customer visits to the digital platform and 53.3% of the transactions effected on the digital platform were made through the website. In 2014, was launched the mobile site, an online channel developed to improve customers’ mobile shopping experience. In 2018, 51.4% of customer visits to digital platform and 29.6% of the transactions effected on digital platform were made through online mobile transactions. In 2015, Company launched its mobile application, which was downloaded approximately two million times in 2018. In 2018, 13.9% of customer visits to digital platform and 17.0% of the transactions effected on digital platform were made through the mobile application. Also in 2018, Company’s digital platform served over one million customers throughout the year.
Company also offers a marketplace platform, which enables partners to advertise and sell their products on digital platform. Having launched in 2017, marketplace platform strategically complements Company’s portfolio by providing customers with a greater number and variety of sporting goods.
In 2018, digital platform, encompassing Company’s website, mobile site, mobile application and marketplace platform, experienced approximately 14 million visits per month and accounted for 16.0% of net sales (13.1% in 2017).
Online retail sales in Brazil grew at an average rate of 12.7% per year between 2012 and 2017 according to a 2018 report published by EBIT Webshoppers. Through digital platform, Company is prepared to take advantage of the growth trend of this market in the coming years. Company believes that the future success of retail is correlated to the service provided to customers. Accordingly, its aim is to provide a platform that enables customers to enjoy a connection between the sporting community and the sports they practice in the most meaningful way possible, through an offering of products, services, information and experiences.
One of main initiatives to serve customers is the omni-channel platform, a platform that Company has implemented over the last few years and through which it offers a superior level of service to customers. This proprietary technological platform is based on the integration of physical and digital channels, whereby physical stores act as distribution hubs from which customers retrieve and exchange products purchased on digital platform. At the same time, customers using digital platform are able to purchase and receive products at home located in physical store inventories.
Company believes that omni-channel platform provides the Company with greater profitability and increased loyalty from customers as it allows to offer shorter delivery times, lower freight costs and a greater assortment of products on offer.
In the context of the evolution of the retail sector and the implementation of omni-channel strategy, Company believes that the role of physical stores must evolve to offer customers an environment that cannot be replicated by purely digital purchasing formats. To this end, Company created 5th generation store concept. 5th generation stores are designed to embody Company’s value proposition, offer experiences that improve customers’ shopping experience, incorporate the benefits of omni-channel platform in a physical store format and provide customers with opportunities to connect with sports in general.
Company’s culture is in line with the strategy of offering a differentiated shopping experience to customers, with a focus on service excellence. Company seeks to constantly apply various initiatives to better understand the preferences and demands of customers in order to mold its offering in line with those needs. As a result of customer-centric approach, Company has experienced an increase in Net Promoter Score (a standard industry methodology that measures the likelihood that a customer would recommend a given product or service to a friend or colleague), or NPS, from 72% in December 2017 to 82% in December 2018.
Company is focused on the sale of sporting goods and on offer an extensive portfolio of over 300,000 SKUs, incorporating different technologies at a variety of prices, including footwear, clothing and accessories manufactured by several brands. In order to complement the product portfolio and increase profitability, Company also market products from own proprietary brands.