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Brazil's GPA strikes deal with drugstore chain RD to create loyalty program JV

By Gabriela Mello

By Gabriela Mello

SAO PAULO, Nov 27 (Reuters) - Brazilian supermarket group Grupo Pão de Açúcar SA has signed a deal with drugstore chain RD SA to create a loyalty program joint venture expected to start in the second half of 2020, both companies said on Wednesday.

Under the terms of the agreement, which is still subject to approval by local antitrust regulator Cade, GPA, the local subsidiary of France's Casino Guichard Perrachon SA, will have a 66.7% stake in the joint venture and RD the remaining 33.7%, they said in a securities filing.

Called Stix Fidelidade, the new loyalty program is a push to broaden their customer base, as well as shopping frequency for both companies, GPA's Chief Executive Peter Estermann told journalists on Wednesday.

"We're absolutely confident this will be the largest loyalty venture in retail, as the program starts off with presence in 23 states and over 3,000 stores," Estermann said.

Initially, customers will be able to accumulate points when shopping in Extra and Pão de Açúcar stores, as well as Drogasil and Droga Raia drugstores, according to RD Chief Executive Marcílio Pousada.

Both executives declined to provide details on how much each company is investing in the partnership or what will be the conversion ratio of purchases into Stix points, but noted each point can be exchanged for 1 real in future shopping.

The loyalty program also involves Itaú Unibanco SA , Latin America's largest private lender, whose credit card users will have the option to transfer points to Stix Fidelidade.

This will require GPA to break up a partnership struck more than a year ago with loyalty firm Livelo - a joint venture between Banco Bradesco SA and state-controlled Banco do Brasil SA, Estermann noted.

Together, GPA and RD already have over 55 million loyal customers, but the plan is to add new partners from other retail segments to the platform over time to create more redemption alternatives and draw new participants.

"Stix will be the common currency that will give us the opportunity to build loyalty and bring in new customers that relate with our partners, thus creating synergies," said GPA's executive director Eduardo Leonidas, who is leading the Stix initiative. (Reporting by Gabriela Mello; Editing by Cynthia Osterman)