Step is necessary before growing in Europe and Asia, says executive
After speeding up online sales during the Covid-19 pandemic, navigating through high interest rates and inflation, Brazil’s retailers are now seeking efficiency instead of accelerated growth. Representatives of these companies visited the pavilions of the NRF 2023 retail conference, in New York, this week, in search of answers to pragmatic questions through technology instead of futuristic trends.
“It’s no use talking about metaverse if I can’t integrate my stock with the online operation, for example,” said Rafael Forte, CEO of Vtex, a Brazilian multinational software-as-a-service company for online sales, which joined the list of Brazilian unicorns in September 2020 and went public in the New York Stock Exchange (NYSE) in July 2021.
Brazil’s retail results with the last Black Friday, which came below 2021 in gross sales, do not mean that the industry has not raised its margins in the period, said the executive. “The first thing that changed [in retail since last year] is that the game now is profitability and it is not made only with sales increase. You need to have margin and streamline the operations,” said Mr. Forte.
Working with leaner inventories, in reduced spaces or inside stores, as U.S.-based Macy’s has done in 35 stores over the past few years; betting on salespeople who attend customers in a customized way through WhatsApp, as fashion retailer C&A has done; or integrating the items on the shelf to the online sales inventory, as Carrefour has done, are some strategies in the search for efficiency shared by these companies during the NRF 2023.
For Vtex, which was born as an e-commerce platform and expanded its operations into software for managing other fronts of the sales chain, gaining the trust of U.S. companies is the focus before expanding operations in Europe and Asia, said the executive.
In September, the company opened an office in a prime area of Manhattan, where 40 people work. “If you build credibility here [in the U.S.], the global market respects it, so we need to have that focus,” he said.
Vtex has 2,400 clients in 38 countries. In the U.S., it has local contracts with AB Inbev, Motorola, Stanley, Black & Decker, and Whirpool. Brazilian clients currently generate 53% of the company’s revenue, and Latin American clients, more than 90%.
Before building a base in one of the most expensive square meters in the world, however, Vtex had to lay off employees, an adjustment measure that almost no unicorn – technology-based companies valued at over $1 billion – could avoid since last year.
The team of 1,850 people in February has dropped to 1,400 now. “We hired a lot of people, since 2020, when we had 400 people, to meet demand from retail, which was under pressure [in the pandemic] and then needed to streamline operations,” said the executive. “When you grow very fast like that, it is inevitable to lose efficiency, so we had to look inward and search for that again.”
The measure reflects greater investor caution in the face of the slowdown in the U.S. and global economy, causing technology companies to also seek efficiency. “Just as retail has been looking for efficiency, so have we.”
In the third quarter of 2022, Vtex’s revenue totaled $38.8 million in the first quarter of 2022 – of which $36.5 million in software-as-a-service subscriptions –, up 21.6% year-over-year. The net loss of $11.5 million in the September quarter was 47.7% lower than a year earlier.
(The reporter’s travel costs were covered by Vtex.)
*By Daniela Braun — New York
Source: Valor International