Casas Bahia Comercial Ltda.

Casas Bahia Comercial Ltda.

Avenida Conde Francisco Matarazzo 100, Centro Sao Caetano do Sul, Sao Paulo 09520-900 Brazil Telephone: (55) (11) 4225-6000 Fax: (55) (11) 4225-6431 Web site: http://www.casasbahia.com.br

Private Company Founded: 1957 Employees: 21,425 Sales: BRL 9 billion ($3.08 billion) (2004 est.) NAIC: 443111 Household Appliance Stores; 443112 Radio, Television, and Other Electronics Stores; 442110 Furniture Stores

Casas Bahia Comercial Ltda. is the largest nonfood retailer in Brazil. A mass marketer, it achieves very high turnover by selling furniture, appliances, and other household goods at low prices, chiefly on credit, to some of the poorest people in the urban parts of the Western Hemisphere. Conceived, created, and presided over by Samuel Klein, a rags-to-riches immigrant sometimes called the Sam Walton of Brazil, the retail chain remains privately held.

Selling to Brazil's Poor: 1957–89

One of nine children of a Polish-Jewish carpenter, Samuel Klein was sent to a German labor camp at the age of 19 during World War II. He escaped two years later as Soviet troops advanced westward, but his mother and five younger siblings did not survive deportation to a death camp. After the war he worked on his own—chiefly selling cigarettes and vodka to Soviet soldiers—in Germany for five years before immigrating to Bolivia with his wife and eldest son. Settling in the Sao Paulo industrial suburb of Sao Caetano do Sul in 1952, he became a backpack peddler armed with a list of 200 customers for bed linens, blankets, and towels obtained from another Jewish immigrant. After a while he was able to make his rounds in a horse-drawn cart. His clients were working-class people, many of them natives of impoverished northeastern Brazil who had migrated to the Sao Paulo metropolitan area looking for comparatively well-paid factory work. By 1957 he had 5,000 customers buying a large variety of merchandise.

Klein, in 1957, purchased a store in Sao Caetano with about 800 customers. It was named Casa Bahia because many of the customers came from the state of Bahia. He sold furniture and clothing, chiefly on installment payments (including 3 to 5 percent monthly interest) that he calculated on the spot to people who otherwise did not qualify for credit. "The poorer the customer, the more punctual his payments," Klein told Miriam Jordan for an article published in the Wall Street Journal in 2002. "The poor know they need to guard their reputations…. My talent is trusting the poor and giving the poor good service." When he opened a second store, restricted to clothing and tended by his wife, the two units became "Casas Bahia." In 1964 he opened a much larger store, specializing in furniture and appliances.

The growth of the business required more capital than Klein had been able to assemble, even though he was borrowing money from three lenders. The turning point in his career, as he saw it, came in 1970, when he purchased a half-share in a consumer-loan company named Financeira Intervest. Before the year was out, the capital from this company had enabled him to do so much more business that he was able to buy out his partner and, in effect, self-finance Casas Bahia. Klein then bought stores in neighboring cities and had 15 units in 1972. Before the year was out he had acquired a five-store chain in the port of Santos, about 60 miles southeast of Sao Paulo. He also secured a steady source of merchandise by purchasing a major furniture manufacturer, Bartira, in 1981. Casas Bahia continued to sell goods door to door until 1984, but all installment buyers had to make monthly payments at the nearest store, where other goods might catch the customer's eye. About two-thirds then made more purchases.

By the end of 1988 the Casas Bahia chain had grown to 56 stores and had penetrated the interior of the state of Sao Paulo. Its number of registered customers had reached two million, and the number of sales transactions 100,000 monthly, of which 75 percent involved installment purchases, financed by Intervest. The chain kept in stock 2,000 different items, with enough merchandise on hand in a 40,000-square-meter warehouse for its fleet of 150 trucks to supply the stores for two months.

Expansion on His Own Terms in the 1990s

By 1990 Brazilian journalists were describing Klein as the Sam Walton of Brazil. His chain now came to 100 stores, which in that year brought in $874 million in sales, 60 percent more than in 1989. His personal empire also included two Volkswagen auto dealerships; Bartira, the furniture manufacturer; Intervest; a brokerage named Interbens; and the house advertising agency, Interjob. Casas Bahia was now Brazil's fifth largest nonfood retailer. Yet Klein looked anything like a tycoon, receiving journalists in the modest headquarters of his enter-prise, still located in Sao Caetano, clad in a cheap open-neck sports shirt and slacks, with sandals on his feet.