The solution
The BBC's 'The Boss' series profiled Luiza Trajano, who became chief executive of her family's home-electronics retailer Magazine Luiza in 1991, aged 40. Brazil then had inflation of about 3,000% and the government introduced and dropped four currencies between 1989 and 1994. She wanted to expand nationwide, but opening big stores stocking the whole range looked risky in those conditions.
So, starting in 1992, she opened micro shops that held no stock. Customers sat at a computer terminal, browsed a computerised catalogue of everything on sale and ordered; the company delivered to their homes from a network of nationwide depots. Brazil's consumer internet access only began in 1997, so Trajano called it a precursor of online sales. The model let the chain expand quickly and cheaply, and meant it no longer had to reprint physical price labels with each bout of inflation or new currency; prices were changed on the computer system.
She also explained the plan to staff so they would stay motivated, and in sale periods opened the shops at 5am, which she says was unseen in Brazil at the time.
What it achieved
Open micro shops with only a computer terminal, and deliver the goods from depots.
Why it worked
Stockless shops need little capital, so opening more of them was cheap and fast.
Holding no stock removed the risk of inventory losing value to inflation.
A computer catalogue meant price changes happened once, centrally, with no relabelling.
Delivery from regional depots served many small shops from shared inventory.
What can be applied
When conditions make fixed assets risky, move the inventory and price list off the shop floor.
Aftermath
Within three years Magazine Luiza had a few hundred shops across Brazil, with up to 58 outlets in some big cities. The BBC reported more than 1,000 stores, 30,000 employees, revenue of 19.7bn reais and 48% of sales online in 2020. As online sales grew, the stockless shops were gradually replaced by larger stores holding some or all products.
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