Despite the challenging macroeconomic scenario in 2014, we managed to end the year in line with our expectations. The World Cup event holidays on the second and third quarter, as well as the economic slowdown on the fourth quarter directly impacted our operational results. In spite of the negative factors, our tenants performed as expected achieving same store sales (SSS) of 6.5% on 2014.
If we exclude the effects of the assets divested in 2014, our total sales reached a solid 10.2% growth in 2014. We also maintained the efficiency of our assets reaching a NOI/m² of R$131.5, our highest level ever recorded.
By maintaining focus in our tenants’ financial health as well as the efficiency of our common costs, we recorded an occupation cost of 10.4% in 2014 in line with 2013.
In 2014 we announced the inauguration of 3 expansions (Shopping Piracicaba, Shopping Recife and São Luís Shopping) and 1 greenfield (Shopping Vila Velha, the largest greenfield ever developed by BRMALLS). With these inaugurations, we increased our total GLA by 111.7 thousand m² and our owned GLA by 45.9 thousand m². We estimate that these projects will generate a stabilized NOI of R$38.3 million.
In order to deliver more value to our shareholders and in line with our portfolio recycling strategy, we divested from 6 assets in 2014 for a total amount of R$389.2 million.
We believe that 2015 will be even more challenging for the Brazilian economy. Meanwhile we will dedicate our best efforts to strengthen the company while increasingly looking to improve our operational efficiency while prioritizing the most profitable investments for our shareholders. In 2015 we expect the inauguration of 2 important expansion projects that will add 12.4 thousand m² of total GLA to our portfolio.
We are the largest company in Brazil's shopping mall sector in terms of total gross leasable area, owned gross leasable area and number of malls. We are also the country's largest supplier of mall management services, as well as leasing and merchandising services.
We ended 2014 with 48 malls in our portfolio, comprising 1,691.0 thousand m² of total GLA and 987.4 thousand m² of owned GLA, with more than 9,000 stores leased and tenant sales of R$23.0 billion. The average share of our malls is 58.4% in terms of GLA. When it comes to malls in which we hold at least a 50% share, they represented 85.3% of our total NOI in 2014. Our average share in these 33 malls is 73.3%.
Our portfolio is strategically diversified according to the income levels and geographic position. Our highest concentration of NOI comes from the middle-income group. Brazil's emerging middle class has grown rapidly in recent years and should continue to growth.
The Brazilian mall market began in 1966, with the inauguration of the first mall in São Paulo. Five years later, was the inauguration of the Conjunto Nacional de Brasília, developed by ECISA and one of the first Brazilian malls to follow the concepts and patterns of the international mall industry.
In the 1970’s, together with the Conjunto Nacional de Brasília, five new developments were initiated. However, it was in the 80’s that this market presented its biggest growth, with the number of malls going up very fast, until the early 90’s, when the pace slowed down due to the financial instability.
In the mid 90’s, there was a new wave of investments in the sector, due to the financial stability derived from the establishment of the Real as the new currency in Brazil, which controlled the Brazilian inflation thus stimulating consumption, in addition to the success of investments in the mall sector during the 80’s. This flow of new investments was also a result of the higher availability of funds of pension fund’s portfolios, which began to invest in shopping centers and contributed significantly to the development of new projects. The pension funds, considered very conservative, were attracted by the nature of the shopping mall business, as a cash flow generator, and by the high return achieved by prior investments in the sector.
The number of malls grew very fast until the year 2000, when the sector reached a total of 281 malls. Despite the returns over investment, following 2001, there was a reduction in the number of mall openings. The main factors that explain this slowdown are the lack of available funds and funding methods and the decrease in the interest of the pension funds in the mall sector, as a result of new regulations that imposed restrictions on real estate investments as a percentage of their total assets.
By 2006, the sector was once again facing a favorable scenario. Foreign real estate and local investors were attracted by improved macroeconomics and better market funding conditions.
Over time the number of malls increased: if we compare the total number of malls in 2000 (281) and 2014, there was a 85.8% growth. By the end of 2014, there were 522 malls in Brazil.
Nowadays we observe a slowdown in developments and inaugurations in the sector. It has become increasingly hard for new players to venture in the sector amidst the challenging macroeconomic scenario, high inflation and interest rate. New players that lack the experience and expertise struggled to lease their new projects and, especially in 2014, we observed projects opening with high vacancy rates.
In early 2014, ABRASCE (Brazilian Shopping Mall Organization) predicted the inauguration of 43 malls. By the end of the year we observed a number of inaugurations 37% lower than expected with 27 new malls, reaching 522 malls by year-end 2014.
The current scenario of the Brazilian mall sector is best described as a sector going through its consolidation, since it is still very fragmented when compared to other countries. The 4 main Brazilian players hold approximately a 20% market share.
From 2006 to 2014 the shopping center sector grew 84.2% in terms of GLA, representing 18.9% of the national retail and 2.8% of Brazil’s GDP. The total GLA of Brazil’s shopping mall sector grew 84.3% between 2006 and 2013, reaching a GLA of 13.8 million in 2013, as shown in the graph below:
Even though the total gross leasable area grew enormously, when we compare the total GLA per inhabitant to other countries where the mall sector is more developed such as USA and Canada, it is still very low. This comparison shows that there is still a lot of space for new developments in Brazil.
The total Gross leasable area for the sector, is divided geographically in the following manner: 55.0% in the Southeast region, region with the country’s largest GDP; 17.2% in the South region; 14.1% in the Northeast region; 9.1% in the Middle - West region; and 4.6% in the North region.
Together with the growth in the number of malls came the growth in its sales. The mall industry’s total sales grew 184.6% from 2006 to 2014, as shown below:
Throughout the years, Brazil reached its economic stability, controlled inflation levels and a reduction in interest rates. Therefore, there was an increase in consumption with the rise of the middle class driving the increase in retail sales.
Brazilian shopping centers attract consumers not only for their stores, but also for the wide range of services in a single location, parking spaces and air conditioning. The sense of security and protection against tropical rains during the Christmas shopping season (the peak of retail sales in Brazil), are some of the reasons why growth in malls’ sales is bigger than the growth in retail sales in Brazil. As a result, the participation of malls’ sales in total retail sales is growing, reaching 18.9% in 2014, which is still low when compared to countries such as Canada and USA, in which malls’ sales represent more than 50% of total retail sales.
The growth in the mall sector also has an important role in the country’s economy, generating many jobs and helping the development of small communities through social works. In 2014, the sector offered 979 thousand jobs, an increase of 12.9% over 2013.
The mall industry is also very important in the development of small and medium cities. Although the majority of malls are located in big cities, in the last five years there has been a tendency to invest in malls in smaller cities. The developments in these cities have a different format, they are smaller and their public is the population that lives nearby.
Another observed tendency is that of enhancing the malls’ social functions, offering a wide range of services as well as leisure and cultural activities. According to Alshop, in 2014 only 40% of consumers mentioned shopping as the main reason to visit malls, the rest of consumers are attracted by other services. The chart below shows the main reasons cited by consumers for visiting shopping centers:
Our Dream
To be the biggest and the best shopping mall company in the world.
Our Values
Develop Owners
We hire, train and retain the best people and provide them with an environment in which they have responsibility, autonomy and feel like owners of the business.
Work with Simplicity and Agility
We have a simple, agile, flexible and transparent structure, and we respond quickly to opportunities and changes that occur in the market.
Perform with consistency and efficiency
We act with objectivity, sense of urgency, efficiency and humility, and consistently satisfy our clients and partners' expectations.
Prioritize Growth and Productivity
We are really focused in contributing to BRMALLS' growth, improving the company's productivity and profitability in the short and long term.
Focus on Results and Meritocracy
We work as a team and in a disciplined way in order to consistently exceed challenging goals, and allocate responsibilities and reward based on merit.
We believe that by implementing our main strategies, we will improve our operational development, maximize returns for our shareholders and generate competitive advantages, thereby fueling our growth. Our main strategies are:
Constantly seeking attractive growth opportunities through development and expanding our portfolio:
As mentioned before, we believe there is still considerable room to consolidate the sector in Brazil through new malls (greenfields) and expansions.
In 2014 we opened our 10th Greenfield, Shopping Vila Velha and three expansions: Shopping Piracicaba, São Luís Shopping and Shopping Recife. We estimate that these expansions should generate R$38.3 million in stabilized NOI.
Continually extracting value from the malls in our portfolio:
In spite of benefiting from the higher growth of shopping center retail, we have always sought measures and actions that improve the performance of our malls. Therefore, we are focused in continuously extracting greater value from our portfolio.
Focusing on improving efficiency:
We are always seeking means of improving our processes, by implementing the highest standards of operational and financial related excellence, through the creation of a Shared Service Center (CSC), responsible for all administrative, financial, accounting, IT and other services for our offices and malls, and through the adoption of an integrated management system (Oracle Business). Thanks to improved processes, scale gains and increased bargaining power through the centralization of purchases and the outsourcing of cleaning, security and other services, we have been able to increase the focus on our core activities.
Our employees are our most important asset and we believe that we have the best team in the Brazilian mall industry. Our position as the country’s shopping mall leader, together with our accelerated growth plan attracts excellent professionals.
Investing in people:
BRMALLS ended 2014 with around 1,100 employees, 770 of whom work in the malls.
Our management team spends considerable time and effort on developing and recruiting professionals, externally, internally, through our referral program and trough the best human resources consultants in the market. We also have two strategic programs for attracting new talents:
Trainee and Internship Program
BRMALLS’ trainee and internship programs were created to attract and train talented young people to become future leaders and hold strategic positions within the Company. Seven trainees from previous programs are now managers and another ten are company partners, three are superintendent and 10 are coordinators. The 2015 program received 17,010 applicants, 10 of whom were selected.
Greenbelt Training
Greenbelt is a Six Sigma certification that we offer to our trainees in order to develop an analytical, problem-solving, results oriented and complex mindset. The certification involves developing and presenting an intricate project where each pair of trainees must analyze a specific performance indicator and propose a plan of action to improve it according to the company’s needs and goals. The projects are challenging enough to remove the trainees from their comfort zone so they can quickly develop new skills and mindset. The project must adopt the DMAIC methodology and, at the end of the year, it is presented to the senior management team.
Performance-based compensation
BRMALLS’ corporate culture is based on merit and focused on results. Our employees are tested against specific targets, as well as through a 360° evaluation. Compensation is based on objective goals (80%). We establish a set of targets for each employee and our bonus program is tied to the achievement of individual and collective goals. In order to monitor performance, we implemented a performance management tool that measures the progress towards the established targets on a monthly basis and we hold monthly performance meetings to monitor this progress. The other 20% of the compensation is based on subjective goals “the 360° Performance Evaluation System”, which is a mechanism for evaluating individual performance based on feedback from peers, as well as junior and senior management. The evaluation aligns the Company’s culture and values with those of our employees and serves as a motivational tool by letting employees know how they are regarded by the Company and what is expected of them.
Stock Option Plan
We grant stock options to the Company’s key employees. Our stock option plan seeks to retain these employees and align their interests with those of our shareholders, reinforcing the sense of ownership in our top managers. Currently there are 30 partners, including directors, managers and coordinators.
Development Programs
PDN: The Business Development Program aims to align and expand the “Shopping Mall” business in BRMALLS’ vision, with lectures covering the mall industry and different areas in the company. It occurs every year and lasts for two days. Trainees, managers and superintendents attend the meeting.
PDL: The PDL (Leadership Development Program) was launched in 2011 and it is our most robust leadership training program. The program consists in three modules. BRMALLS and partner Mandelli Consultoria seek to develop our future leaders working on topics such as team management, leadership styles, confidence and others. The program consists in three modules: the first involves all our coordinators and seeks to develop a broader view of basic people management for employees that are having their first leadership experience. The second module is dedicated to our senior leadership, adding more in depth leadership topics trough self-knowledge and experience sharing. Lastly, the third module invites employees that have already taken the second module and seek to recycle all concepts introduced in the second while applying it to real life situation.
Excellence Programs
PES: The Excellence Program in Shopping center aims to standardize excellent processes, increase revenue, reduce costs and mitigate risks. The program consists of 9 phases, which are the malls’ daily processes. The goal is to follow every process according to the PES manual while saving the evidence for it. Each phase is worth 1.000 points where 500 points relate to processes and the other 500 relate to results. There are 3 overall assessments measuring the execution of the processes and results. After measuring the indicators, the external auditing tests the validity of the processes and add up the points. The three malls that score the most points will be invited to the award ceremony where they will receive a trophy from our directors as well as a monetary prize.
PED: The Excellence Program in Development (greenfields and expansions) has the aim of identifying and disseminating best practices in order to achieve better results. It is divided in 13 phases such as construction phase and pre-operational phase. In this program the competition is not by malls, but by teams that represent a specific project. The team is composed by 8 people and it is led by a project manager and coordinator. The results come from three self-assessments and an external auditing. The three malls that score the most points will be invited to the award ceremony where they will receive a trophy from our directors as well as a monetary prize.
In 2006, when BRMALLS was established, we were the fifth largest mall company in Brazil; only three years later, we became the largest company in the sector. We achieved this position through a combination of hard work, excellence and teamwork, together with certain other differentials, such as our scale and performance-driven professional management, uniting all the competitive strengths that have helped ensure our continued sector leadership.
Strategically diversified portfolio
Our mall portfolio is strategically diversified both in terms of geographical location and income segment. We believe our nationwide presence and experience of running malls that target different income groups allows us to benefit from the economic growth of each region and group, minimizing the impact of fluctuations in regional economies and sectors while providing us with a key competitive advantage for the implementation of our growth and consolidation strategy.
Professional management and the best operating performance
We have an exemplary team of professionals who are widely recognized in the market and have substantial experience in shopping mall, real estate and financial sectors, as well as general management. Our compensation policy seeks to align the interests of these professionals with those of our shareholders through a bonus program and stock option plan that reward good performance and the achievement of established goals. However, being the best mall operator in the sector requires more than just a strong team, so we have also implemented several management tools to ensure the best possible operating performance. We focus on improving our results while maintaining the quality of our operations through practices such as tenant mix planning, quality indices, standards of excellence and meticulous control over late payments.
Multiple growth opportunities
The Brazilian shopping mall industry presents us with unique growth opportunities. The combination of retail sales growth and the fragmentation of the mall market create excellent opportunities for the development of greenfield projects and the acquisition of interests in existing malls. Our growth strategy has several competitive advantages, including the successful track record of our management team and our principal shareholders, as well as privileged access to opportunities arising from the latter's extensive network of relationships. Our diversified growth strategy, through new projects and acquisitions, is another key advantage, allowing us to benefit from the multiple opportunities in the Brazilian market. By the end of 2014 we had developed a total of 10 greenfields and 17 expansions.
Most efficient company in the sector
Since 2006 we have implemented a series of measures to increase our margins, focusing on cutting costs, increasing revenues, improving collection tools and reducing vacancy. As a result, we have the highest margins of any listed company in the Brazilian shopping mall industry and they are expected to widen still further following inauguration of the new malls and expansion projects envisaged in our business plan.
We can notice the results of our efforts through our NOI margins (which are the highest in the sector) and our occupancy cost that are consistently below our peers’.
Size matters
Our nationwide presence (the only mall company present in all regions) and position as the leading shopping mall company in the sector has increased our bargaining power with outsourced companies and retailers, and diluted our general expenses and investments in technology thanks to our more extensive asset base. Our size also allows us to attract and hire the best people and offer more opportunities to our employees. Also, scale give us advantage in a more competitive scenario, in which we don’t see it as a threat, but as an opportunity to consolidate the sector.
Turnaround
The turnaround process consists of three stages. The first one is the takeover, which offers rapid gains. Its objective is to implement our culture and controls, hire the base team and reduce vacancy. This phase lasts for 12 months. The second stage is consolidation, which takes from 12 to 30 months and is achieved through indicator-based management, the application of all of the management tools, strong team skills, MANOI and participation in the Mall Excellence Program. The final stage is that of the mature shopping malls. It consists of innovating and exporting talent, obtained by piloting new tools, cultivating a stabilized team and obtaining the latest information related to the three stages. This phase lasts from 30 months on. The principals involved in each of these three phases are: people, processes and discipline.
Throughout 2014, the Company focused on improving its corporate governance practices. Our IR team worked hard on keeping investors and analysts even better informed by organizing events, increasing analyst coverage and optimizing meetings and conferences.
BRMALLS Day
In the final quarter of 2014, we held an event, which took place on December 10th at São Paulo, bringing together several analysts and investors for a morning presentation by our Company. All of the Company’s executive officers took part, including our CEO, Carlos Medeiros. Due to the success of the event, we hope to do something similar in 2015 again at a Company property as part of our efforts to keep the market informed about BRMALLS.
Conferences
Conferences are extremely important opportunities for meeting with investors and analysts, as well as expanding the Company’s international visibility. Given that BRMALLS has many foreign investors, participating in international conferences is one of our primary IR goals. In 2014, the Company took part in 17 domestic and international conferences.
Meetings
It is also crucial to maintain contact with shareholders and potential investors on a daily basis. Our IR team organizes non-deal road shows and conference calls, as well as meetings with investors, analysts and anyone else who wants to find out more about the Company. This allows us to keep our investors and analysts abreast of what is happening at the Company and what to expect in the future.
Analysts
One of the simplest ways of expanding our investor base is through coverage by analysts from important banks and other financial institutions. We currently have 19 analysts tracking the Company.
BRMALLS has been listed in the BOVESPA's Novo Mercado trading segment since 2007, under the ticker BRML3. It is also present in the U.S. market through a Level 1 ADR program on the OTC market under the ticker BRMLL. Below are some key share performance figures in 2014:
Share Performance (12/31/2014)
R$ 16.43; > (-1.1%) in 2014 vs. (-2.9%) IBOV.
R$7.6 billion;
R$18.46
6,037 shares;
R$ 49.2 million
Index
On December 31st, 2014, the Company’s shares were represented in 31 indices, including some of the BOVESPA’s most important:
Debt Structure
BRMALLS’ executive officers are its legal representatives and are primarily responsible for the day-to-day management of its business and for implementing the general policies and guidelines determined by the Company’s bylaws and by its shareholders and board of directors. BRMALLS' board of directors is its decision-making body responsible for formulating the general guidelines and policies for its business, including its long-term strategies. Among other matters, it is responsible for appointing and supervising its executive officers. Our board of directors and board of executive officers at the end of 2014 are listed below:
Mr. Medeiros holds a bachelor's degree in finance and foreign trade from New York University, and has completed the TGPM Program at Harvard Business School. He is the CEO of BRMALLS since its foundation in 2006. He joined the GP Group in 1998, and remained as an associate partner until 2011. He serves as a member of the board of directors of GP Investments Ltd., Gafisa S.A., Tele Norte Leste Participações S.A. and Contax Participações S.A. He was an associate at Salomon Brothers Inc. in New York from 1994 to 1998.
Frederico da Cunha Villa holds a bachelor's degree in business from PUC-RJ (1998), and started his career at PwC Independent Auditors in 1995 as an External Audit trainee. In 2002 he became a manager responsible for sectors such as external audits, partnership planning, mergers and acquisitions and assistance on Capital Market operations. He started at BRMALLS in 2008 as a corporate controller until 2012 when he became the Director of the Shared Services Center (CSC).
He holds a bachelor’s degree in Economics from IBMEC-Rio in 1998 and a master’s degree from Harvard Business School in 2005. In BRMALLS Mr. Kameyama has served as general manager in the Operations and M&A areas. Prior to working for BRMALLS, he served in the M&A area of Spoleto Franchising (2005-2006) and was an associate of Dresdner Kleinwort investment bank (1998-2003).
Holds a bachelor’s degree in engineering from Universidade Federal de Goiás in 1981, a graduate degree in business administration from IBMEC- Rio de Janeiro in 2001 and in business management from FGV - Rio de Janeiro in 2005, with extension in the University of California, Irvine campus. In 2009 he concluded the Executive Development Program - EDP at University of Pennsylvania - Wharton. Mr. Luiz Quinta has 22 years of experience in the management of shopping centers. He worked as Multiplan Group’s COO before joining BRMALLS.
Graduated in Economics at PUC-RJ (Pontifícia Universidade Católica do Rio de Janeiro) in 1998, has a MBA from IBMEC and an extension in Marketing by U.C. Berkeley. He works with Malls since 1996, and has gone through many other companies before BRMALLS. In BRMALLS he acted as Commercial Manager in the holding level, Marketing Manager at Norteshopping, Commercial Manager for the Regions of North and Midwest, Key Account Manager and Deputy Commercial Director.
Started her career at Pactual Bank in 1994 as a legal assistant, later becoming a lawyer and in 2001 an associate partner at Pactual in charge of the Legal department. She started at BRMALLS in January 2007 as a legal manager and later as a Legal Deputy Director in 2009. Currently she holds the position of Director of Business development in BRMALLS, in charge of analyzing and evaluating the legal aspects of all activities to be developed by the company in accordance to all legal and regulatory requirements.
Holds a bachelor’s degree in mechanical engineering at Rio Grande do Sul Federal University (UFRGS) in 1995, a graduate degree in Business Management in 1997 at Fundação Getúlio Vargas, Master’s degree in Business at UFRGS in 2000 and an e-commerce extension in 2001 at U.C Berkeley. He was a financial director at Duloren (1999-2000 and 2006-2007) and a superintendent at UnibancoAIG (2001-2006). Started in BRMALLS in 2010 as the superintendent of Plaza Niterói later becoming a Regional Director (SP). In May 2014 he was elected Director of Business Development.
Holds a bachelor's degree in economics from Universidade Gama Filho. He joined ECISA in 1960, and became chief financial officer and a shareholder in the mid-1960s. In 2000, due to his extensive knowledge about the mall industry he became president of ECISA, in charge of the company’s strategic decision making and institutional reputation.
Mr. Medeiros holds a bachelor's degree in finance and foreign trade from New York University, and has completed the TGPM Program at Harvard Business School. He is the CEO of BRMALLS since its foundation in 2006. He joined the GP Group in 1998, and remained as an associate partner until 2011. He serves as a member of the board of directors of GP Investments Ltd., Gafisa S.A., Tele Norte Leste Participações S.A. and Contax Participações S.A. He was an associate at Salomon Brothers Inc. in New York from 1994 to 1998.
Holds a bachelor’s degree in engineering from Universidade Federal de Goiás in 1981, a graduate degree in administration from IBMEC- Rio de Janeiro in 2001 and in business management from FGV - Rio de Janeiro in 2005, with extension in the University of California, Irvine campus. In 2009 he concluded the Executive Development Program - EDP at University of Pennsylvania - Wharton. Mr. Luiz Quinta has 22 years of experience in the management of shopping centers., he worked as Multiplan Group’s COO before joining BRMALLS.
Graduated in Economics at Universidade Federal de Minas Gerais (1970) and PHD (1977) in Economics at Massachusetts Institute of Technology. Since 1978, he is the Professor responsible for Economics Department of Pontifícia Universidade Católica at Rio de Janeiro. He has worked as a consultant for international organizations such as, The World Bank, The Interamerican Development Bank, The International Labor Organization and The United Nations University. He was a partner of Tendências Consultoria Integrada and is currently partner of Opus Gestão de Recursos.
The current president of ENEVA, a power generation company based in Rio de Janeiro, Bicudo was the Chief Investment banker and member of the board at Goldman Sachs and Citigroup. Fabio holds over 16 years of experience in investment banking and vast knowledge of Brazilian Real Estate, having lead a team that was responsible for some of BRMALLS’ Public offering and debts. He holds an MBA in finance from Columbia Business School. He also studied at HEC in Paris and graduated from Fundação Getúlio Vargas (FGV) in São Paulo.
Mr. Ferreira has more than 40 years of experience in the retail industry. In 1974 he was founder of Richards, one of the most successful retail chains in Brazil, with over 85 stores throughout the country. In 2011 Richards was incorporated by Inbrands, one of the largest fashion retailers in Brazil, with more than 330 stores. He is now a shareholder and board member of Inbrands and also member of Cia Industrial Cataguazes.
Mr. Dias was diretor at Open Corretora de Valores, presidente at Banco Primus and presidente at Primus Corretora until 1999. He was also presidente of Banco Banif Primus and Banif Primus Corretora for two years. From 1999 to 2009 he was part of the board of directors of Banco Banif, Banif Banco Comercial and Banif Banco de Investimentos in Portugal. In 2006 he was member of the board of directors of the Portuguese chamber of commerce of Rio de Janeiro and São Paulo, until 2009. Currently he is director of the International Business Portuguese Confederation, in Lisbon, director of Argon Administração e Participações Ltda and Primus Ipanema Agropecuária Ltda. In the last 30 years, he was part of the Stock Exchange board of directors in Rio de Janeiro. He was also part of the board of directors of BM&F for 2 terms, director and vice-president of Andima for two terms and director and vice-president of Associação de Bancos do Rio de Janeiro.
Caring for future generations
Since its inception, BRMALLS has been introducing the best operational and financial practices into its malls, over the years BRMALLS implemented several projects that will help the environment and allow the company to grow in a more sustainable manner. Whether through educating its customers or by adopting internal measures, BRMALLS is having an increasingly beneficial impact on its surrounding environment. Below are some the practices that we have adopted at our malls:
Recycling
We are fully aware of the impact of urban waste on our planet and the crucial importance of recycling, which is mandatory at our malls. The waste generated by all the malls we manage is separated according to its type into clearly-labeled individual containers located in corridors and food courts. We also ensure appropriate treatment for special types of waste, such as batteries, florescent lamps and oil.
Energy Savings
We focused our efforts on identifying new means of saving energy. Among these projects was the retrofit of the Water Cooling Center, which involved replacing old air conditioning machines with more efficient models that consume less energy and, as a result, help to preserve the environment. In addition, we purchased energy on the open market from small hydroelectric plants (SHPs) and small thermoelectric plants (STPs), both of which are beneficial to the environment and economically sustainable.
In 2014, amidst an energy crisis and the possibility of energy rationing, BRMALLS introduced sustainable and innovative initiatives in order to prevent and protect its assets. The initiatives hoped to avoid energy waste and ensure proper supply to our malls.
2014 Energy Saving Initiatives
– LED Lights
By substituting its conventional lamps by LED lights, BRMALLS hopes to improve the efficiency of the lighting in our malls. LED lights offer a low consumption (80% less than conventional lamps), high durability and lower heating solution to save energy and lower the occupancy cost of our tenants. This project was successfully implemented in Shopping Tijuca where we recorded a 50% reduction in energy costs. We are currently replicating the project in 5 other malls: Center Shopping Uberlândia, Goiânia, Campinas, Jardim Sul e West Shopping.
– Centralized Energy Control System
After introducing a centralized energy monitoring system in all of our malls, we hope to increase our control and management over our energy consumption. This way we can map out energy consumption hikes and quickly act on it in case of a contingency.
– Tennant Energy Consumption Awareness Program
In 2014 BRMALLS introduced a tenant energy consumption awareness program in five of our malls: NorteShopping, Catuaí Londrina, Shopping ABC, Center Shopping Uberlândia e Del Rey. We invited energy experts and held events that focused on the reduction of energy consumption and sustainability best practices. We also partnered up with an efficiency consultant group to visit the stores and find all possible opportunities to reduce consumption and replace machinery and equipment. The program considerably reduced our energy consumption and promoted a sustainability culture among our tenants. We hope to extend the program to the rest of our portfolio.
– Conscious Water Consumption and recycling
At BRMALLS we are aware of the importance of water and therefore, adopt several measures to decrease our consumption. Be it through stickers in all our bathrooms, booklets for our tenants and outsourced employees and specific training programs. We also reuse and recycle our water in several of our malls. In malls such as Maringá, NorteShopping, Granja Vianna, Tamboré, among others, we harvest Rainwater and send it to our own treatment stations.
– 2014 Water Conservation Initiatives
In 2014, looking to reduce our water cost and supply risks, we set up corporate partnerships to construct water wells and water treatment stations in all possible malls. The malls in São Paulo and Rio de Janeiro benefitted the most from this initiative since utilizing water from wells can reduce in up to 81% the cost of the m³.
We also had other initiatives throughout the year that contributed towards a more efficient and sustainable level of water consumption:
Social Responsibility
BRMALLS is the largest shopping mall company in Brazil, reaching a huge number of consumers. As such, we are well aware of our ability to influence our surrounding communities. Every year, we make the common areas of our malls available for vaccination, disease prevention and NGO fundraising campaigns, organize workshops for children and the elderly, and distribute donations to orphanages and NGOs during the Christmas season.
The Mall & Media revenue line has grown consistently in the last years. This reflects our strategy of complementing the retail channels through temporary spaces (mall) and through advertisements (media). The main factors driving this growth were:
- Revenue from events;
- Scale and national coverage, enabling greater access to retailers and national advertisers;
- New formats and media properties;
- Increased effectiveness of the sales team dedicated to mall & media, providing broad local service and also national service (key account) for the major advertisers.
These factors enabled a great revenue growth: In 2014 Mall & Media represented 11.6% of our Gross Revenue and increased 9.1% when we compare to 2013 results.
Media
The Company has restructured customer service media, consolidating it into a specific department and designating a Director of Media. The main customers have exclusive service treatment in order to invest in multiple malls in our portfolio. We now have a dedicated Media sales force. We broke bureaucratic barriers in order to speed the media announcement process in malls. The simplification of the process and exclusive service treatment were fundamental to increase the amount of customers who hire media at BRMALLS and the investment volume of our largest current clients.
Linktel Partnership
Linktel specializes in building optical networks in the West Cost of USA offering Wi-fi and SSID rental. Linktel is present in all of the Brazilian main cities, 4 continents and over 50 countries. The partnership was set up in the first semester of 2014 and consists in full high speed wi-fi coverage in our malls.
ConectCar Partnership
The partnership consists in allowing our monthly parking subscribers and mall employees to enter the parking lot using the ConectCar Tag with no registration cost or monthly fees. The operational advantages include not having the customer go through the payment process and not worry about cars using the same parking tag since the Connect car tag isn’t transferable to other vehicles.
Santander Partnership
At the end of 2014 we partnered up with Santander so that all its clients could participate in our Enchanted Christmas initiative. For every R$300 spent in the mall, the client received a voucher for a prize draw giving him the chance to win a brand new car. The partnership benefited MasterCard clients who would receive 3 vouchers for every R$300.
Coca-Cola Partnership
In May 2014 clients from Amazonas, Recife, Campo Grande, Capim Dourado and Del Rey malls hosted the world cup trophy tour. The event was brought by Coca-Cola right before the World Cup in Brazil. We had several interactive attractions in our malls such as penalty shootouts, a soccer ball exposition and pictures with the world Cup trophy. Besides the event itself, we also had media investments in all of our malls.
The OBZ Program is a management program to improve condominium costs and therefore contributing to the Company’s’ sustainable growth. It aims to eliminate the inefficiency in costs from previous years and stimulate a culture of efficiency. The implementation of the OBZ methodology program introduces management tools previously unexplored, which act as reductions mechanisms of condominium costs. 200 commandments were turned into cost reduction actions in malls. The program grouped the costs in seven “packages” according to the nature of the costs.
Each package has an owner that is responsible for the results. If we did not consider our improvements in 2014, the condominium would grow 8.4%, or R$ 60.3 million compared to 2013. We closed the year down 3.8% from the previous year.
BRMALLS surveyed men and woman from all social classes about the influence of children over their decision to visit a mall. We came to the conclusion that strolling and eating were the main reasons for parents to bring their children to the mall. We also found out that when families go to a mall specifically to shop, they already know exactly how much they will spend (differently from when they go just for a stroll). Children are very persuasive: we also found out that parents spend more money when they go shopping with children.
In order to be the leader when it comes to Family entertainment in malls, BRMALLS created “The Kingdom” membership program. We hoped to increase consumer average ticket as well as the frequency of families while offering unique experiences in our malls.
Families that become members have discount in partner stores and their children can enjoy parks in several parts of the mall.
The first mall to host the event was NorteShopping. The mall had great results (from the beginning of the program until 11/25/14). It increased its average ticket by 332% from R$300 to R$1,295. Consumer frequency increased to 5 times a month.
In 2015 we hope to replicate the initiative in other malls.
In 2015 we had another great international partnership. We signed an agreement for the license of one of preschoolers’ favorite characters: Peppa Pig.
The partnership between BRMALLS and eOne (the owner of the license for the character) is one of its kind in Brazilian malls and involves two formats. The first cities to host the project are: São Paulo, Belo Horizonte, Rio de Janeiro, Campo Grande, Uberlândia, Londrina, Manaus, Vila Velha and Salvador.
Peppa Pig had its Brazilian debut in 2013 and soon became the number one show in its segment. The show has millions of fans in over 180 countries.
Disney Partnership:
The first event of its kind, premiered at Shopping Tamboré, the Star Wars park has four main attractions: “Endor” Forest Ride: three trees joined by suspended bridges that the kids must cross and finish up with a slide. Meteor Shower: A simulator that seeks to mimic the experience of crossing the space while avoiding getting hit my meteors. Jedi School: Kids learn how to handle a Jedi light saber. They also get a chance to fight Darth Vader. Picture Taking: Kids get a chance to take pictures with the Star Wars flying motorcycle.
For the first time we had a “Princess & Cars” themed Christmas with both male and female decoration. For the female decoration we had Beauty, Ariel, Aurora and Cinderella adornments. For the male decoration we based on the movie “Cars”. We even had a Replica of the main characters.