Wholesaler Introduces Home Center To Bolivia

Home Channel News, Nov 9, 1998

Santa Cruz, Bolivia -- Rodrigo Pereyra is nothing if not realistic. In early September he stood in a steady gray drizzle surveying the concrete shell of what in seven weeks would become Bolivia's first complete home improvement store.

Having just spent the better part of a half hour sketching lines in the dust to show where gondolas soon would stand and talking about how having so many products "all under one roof" has the potential to transform this still backward market, all Pereyra could do was shrug and smile.

"At first, everyone will come just to look at the store," he said of a conspicuous two-story building located on the muddy main route from Santa Cruz's airport to its bustling downtown. "If [customers] like it and are comfortable with our prices, we will build others."

So it goes in the heretofore unexplored territory of home improvement retailing in Bolivia.

In late October, Pereyra and his family, who are long-established wholesalers of hand and power tools and lawn and garden equipment here, took their first steps into the retail business when they opened a 1,900-square-meter (21,000-square-foot) store, with significant assistance from Orgill Inc., a hardlines distributor based in Memphis, Tenn.

Orgill, in Pereyra's words, "supplied all the expertise that no one in Bolivia has." The distributor conducted market research to determine the best location and product mix, supplied the racking and 65 percent of the store's merchandise, and even determined the optimal showroom temperature -- 75 degrees Fahrenheit (24 Celsius).

The ties between the Pereyras and Orgill go beyond America Home Center, however. Rodrigo, 28. graduated from high school in the United States and worked as in intern at Orgill while attending college in Memphis. Upon graduation, he accepted a job as an international sales manager and export coordinator with the distributor, leaving to develop a retail business to complement his family's wholesale operations. By establishing a separate retail division, the Pereyra family hopes to better serve all of its customers, from the large-end users and other retail stores that shop through its wholesale division to the DIYers and contractors who will visit the home centers.

Initially, Pereyra expects the bulk of the store's customers to be professionals -- Orgill's market research suggested that pros would account for 65 percent of its sales -- and middle- to upper-class consumers, so the store is merchandised accordingly. It features nine core departments: hand and power tools, lawn and garden, hardware, electrical, plumbing, housewares, home decor, paint and sundries and two gondolas of automotive products.

The dealer expects to be particularly strong in lawn and garden and in tools, given the obvious synergisms with the family's wholesale business. Concerning other product categories, Pereyra says, "We're being open-minded to see how people perceive our store."

Of the merchandise America carries that Orgill doesn't supply, imports account for 15 percent, with the other 20 percent -- mostly nails, cement, wooden tool handles and paint -- being produced locally.

"Our local manufacturers are not geared for a DIY culture," Pereyra explains.

Neither are most Bolivian consumers, so America Home Center plans to host frequent how-to clinics for DIYers and offers a host of services such as a design center, contractor referrals, tool rental, delivery and paint mixing to help them along.

"In Bolivia, people might come in and buy the nicest wallpaper, but they're going to come to you and ask, 'Who's going to put this up?"' Pereyra says.

Among the unit's other services are a separate contractor office, where it will offer credit to professionals, and a cafeteria in the back of the store.

One of America's more amazing innovations" will be staying open through the daily siesta, the stretch from 12:30 to 2:00 every afternoon when all of Santa Cruz's shops close their doors and the main business district becomes a ghost town.

If everything goes according to plan, the enterprise will eventually build four other stores--two more in Santa Cruz and one each in Cochabamba and La Paz. The other Santa Cruz stores, the first of which might open as early as February, likely will be smaller and more convenience-oriented, Pereyra says.

AT A GLANCE

Company: America Home Center

Headquarters: Santa Cruz, Bolivia

Stores: one

Skus: 22,000