May 14, 2018 / 11:59 PM / in 5 months

Brazil's BR Malls joins e-commerce fray with new delivery partnership

SAO PAULO, May 14 (Reuters) - BR Malls Participações SA , Brazil’s largest mall operator, has acquired a minority stake in e-commerce firm Delivery Center with the goal of enabling deliveries to customers’ doors, the company said on Monday.

In a statement, the company said it plans to use malls as distribution centers to allow for same-day delivery.

Using shopping malls may be a way to circumvent challenges to Brazil’s rapidly growing e-commerce market, the company said, namely the country’s poor infrastructure, which can increase delivery costs and delivery times.

“Shopping malls have a privileged location in (Brazil’s) principal urban centers, an established client base, and product stock from local stores,” the statement said.

Delivery Center will begin operations in malls in Rio de Janeiro in the coming months before spreading to other cities. The statement did not disclose the value of BR Malls’ investment.

E-commerce accounts for around 5 percent of Brazil’s roughly $300 billion retail market, about half its share in the United States. Yet Brazil’s online sales have doubled in four years and are expected to grow at a double-digit pace in coming years.

While that has raised some concerns about the future of Brazil’s brick-and-mortar mall operators, they have remained healthier than their U.S. peers by focusing on entertainment, dining, and other diversions, while locating malls in city centers, among other strategies.

BR Malls has part or full ownership of 39 malls totaling almost 1.5 million square meters in gross leasable area.

On Monday evening, the company posted first-quarter profit that beat analysts’ estimates, as provisions for delinquent tenants fell considerably.

Reporting by Gram Slattery; Editing by Lisa Shumaker

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