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Momentum
Before and after Arezzo’s IPO
Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza
The recent Initial Public Offering (IPO) of fashion footwear chain Arezzo will be considered in the future a pivotal
point in the Brazilian franchising business, due to the figures reached and the attention it brought by raising R$ 565.8
million (US$ 342.91 million), valuating the company in R$ 1.682 billion (US$ 1.02 billion). In the week before the IPO,
the demand was six times higher than the offer.
Today the company is based on the management of four brands (Schultz, Ana Capri, Alexandre Birman and
Arezzo), with 260 franchised stores (seven overseas) and only 27 private-owned stores. In the past, the company
also manufactured shoes.
Strategically, the company changed from a focus on private-owned development, manufacturing, product,
brands and stores to a more open and modern model, based on product development, third-party manufacturing,
brand management, small private-owned chain and, mainly, a large franchised chain in Brazil and overseas.
The IPO will be a strong sign to retailers, CPG industries and service developers review their business strategies
and expansion, dedicating more time and investments to the opportunities franchises and business networks can bring.
Brazil is a very interesting market, specially to companies in the consumer goods segment, with the forecast
of an ongoing virtuous cycle that even the recent global turmoil was not able to halt. But the companies’ challenge is
to develop tools to use this positive scenario, increasing their presence in new markets and speeding up expansion,
in a way consistent with their values and principles.
In this scenario, it’s crucial to speed up the search for new real estate; store projects and openings; the
development of new store formats that fit new markets; the development of leaderships able to expand the business;
recruitment and selection of people in adequate conditions, in a market with less capable people than needed; and
the operation of the growing chain, turning the business expansion into a big challenge.
That’s why franchising and business networks have a strong solution generation potential. Specially in today’s
environment, as master franchisees and franchisees can share investments, management and attention with
franchisors, thus speeding up growth.
Besides that, franchising has a growth potential that needs to be observed in a different, with less prejudice, way,
stimulating an open thinking process. It will always be important to remind that some global corporations have taken
a more positive approach on using franchises as part of their expansion strategy, also as a way to face restrictions
to their expansion imposed by law, specially in more mature markets, as Western Europe and Japan. It’s the case of
Carrefour, who has around 50% of its stores as franchises.
The Brazilian moment and its short- and long-term growth potential are sufficiently strong reasons to lead to
much deeper study of the opportunities that can be created by using franchising as an expansion and market cover
strategy. One can profit on that.