Buying at Luiza Magazine’s “deli meat” is not good, and can double the value of the product. The purchase was revived by the founder and chairman of Magalu, Luiza Helena Trajano, that requires a down payment of over 30% of the product value and makes the price of the refrigerator double from 3,400 reais to 6,800 reais in 18 months. On a note, the company disputes the numbers, saying that its interest rates are in line with the market and that the focus is on credit cards, with lower rates (see more details at the end of this text).
The idea for the brochure was to make it easier to shop and to get the chain’s nearly 10 million customers already registered with the company back in stores.
Where did the idea for meat come from? Luisa Trajano recorded a video that was sent to about 5 million customers on the network, in which she said: “Remember the delicious meat? It will be in installments that you can pay and we will even deduct the interest. Go as soon as possible to one of our stores please. “
What is the cost of using meat? To see the value and how this type of credit works, report UOL asked the company, through its press office. But the amount was not communicated, and the company did not comment on the interest charged.
When visiting a physical store Magalu, in a shopping center in São Paulo, the report by UOL I found that the refrigerator sold in the brochure in 18 months doubles in value.
What are the payment terms? To buy Delicious Meat, you have to pay a down payment on any product. The rest is paid at Carney. The most common term, according to a store saleswoman, is to split the payment into 18 months.
Double price refrigerator: In the case of Electrolux 371L, 110V Frost Free Stainless Steel Duplex Refrigerator, which costs R$ 3,465 in cash, the consumer will have to pay R$ 1,400 down payment and another 18 installments of R$ 300 in the brochure. In total, that would cost R$6,800, a 96% increase, almost double, according to a budget set up by a salesperson in the store.
Do all products have such high interest rates? Fees are not the same for all products. There are some cases where conditions are better. For the Probel Queen mattress, with springs, at a cash price of R$2360, the store asks for a down payment of R$700 plus 18 installments of R$135 in the brochure. The total is R$3,130, an increase of 33%.
Why do stores charge such high interest rates? Retail chains such as Casas Bahia and Magazine Luiza buy from their suppliers with a much shorter payment term than they offer their customers, says Wagner Varejão, an economist at Valor Investimentos.
If the customer pays within 18 months, the store has a maximum of 90 days to pay the manufacturers. It all goes to the interest expense. The longer the payment, the higher the price.
But if Celik’s rate is 13.75% per year, why is the interest on the client 100% or more? Stores charge high interest rates because they know people are paying, and many don’t care about interest rates or simply have no other choice right now, says Adriano Gomes, professor of finance at ESPM and managing partner at Methode Consultoria.
“Consumers are subject to ridiculous interest rates,” he says. “Unfortunately this is the hard and real truth.”
According to Varigao, another thing that goes into this calculation is the risk of default. Since there are many installments, the probability that a person will not pay part of the debt increases.
Magalu compete values
Asked about the high interest rates, Luisa magazine said the bill presented was not real, although the report provided the advice in person at a supermarket chain. The company argues that the advantage is to use the card rather than the brochure and that its interest is within that of the retail market.
See below the full text that Magalu sent to UOL:
“The values presented in the examples cited do not really reflect the CDC’s interest.” [crédito direto ao consumidor, pelo carnê] from Magalu.
Magalu’s main credit instruments are the company’s cards – Magalu Card and Magalu Card. It accounts for 35% of sales in stores. Third-party cards account for another 35% of sales.
CDC is another credit tool used by those who do not have access to cards. Corresponds to only 6% of sales in our stores. The interest charged is in line with the market.
The focus on credit cards in Magalu’s strategy was also demonstrated in a recent pre-approved credit campaign, where 80% of customers were eligible for the company’s cards.”
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