(With Video) Tenda Atacado: Providing Credit, Business Services to a Network of BoP-Focused Stores Across São Paulo
In São Paulo, more than 60 percent of microenterprises fail within the first five years—often due to lack of access to credit. The failure rate for small businesses in developed countries is about the same, but not for the same reasons, of course. Most small entrepreneurs in Brazil are excluded from the financial system: banks are reluctant to lend them in the absence of credit history, depriving them from access to financial services or credit to grow their businesses.
This is where Tenda Atacado Ltda, a retailer and wholesale distributor in the state of Sao Paulo, enters this story. After concluding that most of its clients were low-income micro entrepreneurs who make and sell ready-made food—also called transformadores–—Tenda launched a store credit program to provide them access to working capital and the possibility of buying equipment or hire more people. Tenda complements the financing option with basic training in business knowledge.
Tenda’s strategy responds to the increasing numbers of multinational retailers entering the market to serve Brazil’s burgeoning middle class. In response to the competition, Tenda decided to work more closely with micro entrepreneurs in its network and it has seen the positive results. For 2011, revenues from Tenda stores totaled US $765 million. The company’s credit program reached US$92 million last year, and is expected to grow by more than 50 percent for 2012.
Through a grant from the Korea Poverty Reduction Fund of the Inter-American Development Bank and a loan from IDB’s Opportunities for the Majority initiative (OMJ), Tenda plans to expand its store credit portfolio to another 60,000 micro entrepreneurs while engaging 6,000 of those clients into the capacity-building program. The training program includes what are called “Entrepreneurial Clubs,” or groups of 10 micro entrepreneurs who regularly meet with a Tenda representative to share knowledge and best practices around accounting, cash flow management, food safety regulations and labor laws, among other topics.
I had a chance to speak briefly with Marco Gorini, executive director at Tenda Atacado, during the Base of the Pyramid Week organized by OMJ at the IDB headquarters in late May. (See additional posts on the event below). To find out more about Tenda’s future plans, I’d encourage you to check out the case study, Tenda Atacado: Transforming Business Relations into Partnerships for Growth (PDF), which was prepared by OMJ and distributed during the forum.
Editor’s Note: The video below incorrectly states the company’s name. The correct name is Tenda Atacado. We regret the error and will update the video with the correct name soon.
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