The former Eva Herz theater, in the Conjunto Nacional, in São Paulo will be reopened as YouTube Theater, the result of a naming rights deal made between Magazine Luiza and Google.

The space will become part of Galeria Magalu, a 4,000-square-meter concept megastore that the retailer plans to inaugurate by the end of the year, in an address formerly belonging to Livraria Cultura.

“It will be the first Magalu unit in Paulista avenue, making an old dream of my mother’s, Luiza Helena Trajano, come true”, affirms Frederico Trajano, the group’s CEO, to EXAME.

The news is connected to the company’s transformation process, which was initiated in 2016 when the executive first assumed leadership.

Ever since, expansion has been structured in strategic cycles of 5 years. The first was focused on digitalization and the integration of physical retail and e-commerce. The second, now in its final stage, prioritized diversification, with acquisitions such as Netshoes, KaBuM!,Época Cosméticos, and Estante Virtual,

“The fact that we had physical stores selling only electronics has made it so that the consumer did not have a clear perception that Magalu is much more than just that”, affirms Trajano.

Now, with Magalu Gallery, the company aims to consolidate the ecosystem in a single location and achieve a concept that the executive refers to as a “meeting store”. “It is a place where Chanel products meet Apple’s, Adidas meets Samsung, and even Nvidia graphic cards”, he says.

The initiative goes beyond product sales. The plan is to use the theater and YouTube partnership to attract influencers and content creators, transforming the space into a meeting point to generate audience flow and brand experience, besides reinforcing the association of Magalu to consumption, technology, and culture.

According to Trajano, the idea was not only to preserve the tradition of the former Eva Herz but also to give it a new purpose. “The theater should, for me, in the 21^st century have this ‘phygital’ encounter, that is between physical and digital.” The idea is for it to function as a hybrid stage, capable of hosting both traditional spectacles and digital productions.

Long-time Google partner, he was the one who took the idea to YouTube. “I wish to have creators here inside the store. They need a physical space to meet their audiences. There is a need for this, and the project will enable them to connect with their audience beyond the algorithms, in a real space, through direct interaction.

The gallery was also planned as an Instagrammable store, with areas dedicated to activities and live commerce. The portfolio’s diversity will allow each brand to dialogue with its audience through content creators from different regions.

“Picture a beauty influencer livestreaming directly from Época Cosméticos, a gamer streaming a match with Kabum, or a sports host such as Casimiro interviewing athletes connected to Netshoes. It fits perfectly with the concept of the store”, says the CEO.

Music, theater, literature and…podcasts

The historic name Eva Herz Room will be preserved as homage to Livraria Cultura, which founded the theater in 2017. The space, which has received great names of playwriting such as Rosi Campos, Jô Soares and Clarisse Abujamra, has been closed since April last year, after the play season for Adultério Involuntário.

With the partnership, Brazil now hosts the second YouTube Theater in the world, following the unit's opening in Los Angeles in 2021. However, according to Trajano, this deal differs from its American counterpart in that it extends beyond just the name on the entrance.

“YouTube will have active roles in the promotion of the space and in its programming, offering the theater as a stage for its creators, which could attract an audience and, eventually, earn a percentage of the box office. It will also be an additional source of income”, affirms.

The programming will be continuous and varied, with spectacles, musicals, shows, podcasts, and events connected to literature and the gamer universe. According to Aventura, the expectation is for 62,000 spectators per year, with approximately 2,900 professionals involved, both directly and indirectly.

A strategic detail reinforces integration: one of the main doors to the theater is directly connected to the Megastore, allowing the public to circulate between both environments. “Any initiative that drives audience to the store is strategic. And today, one of the few ways to guarantee an audience is to have influencers bring their audience to physical contact”, affirms the CEO.

He adds that the gallery will also feature Casa da Lu (Lu’s House), a physical space dedicated entirely to Lu, the brand’s digital mascot. “The idea is for her to be the purchasing agent for consumers, the AI agent that will help them make purchases end-to-end.”

The initiative is connected to Magalu’s next strategic cycle, focused on AI. The space will serve as a display for the ‘cérebro da Lu’ (Lu’s brain) project, providing the mascot with resources to interact with clients and facilitate the entire consumption process.

Multi-channel reinforcement

Currently, around 70% of Magalu’s profits come from the digital sphere, which makes up R$ 50 billion from a yearly revenue of R$ 66 billion. Together, Kabum and Netshoes represent R$ 10 billion from this total volume. To Trajano, the advancement showcases the weight of the group’s digital acquisitions, but also the need to give some visibility to the consumer that all these brands are a part of the same ecosystem. The Gallery, he affirms, fulfills this role by physically materializing the diversity of its portfolio.

The megastore arrives at a moment when the company seeks to gain more momentum in a market dominated by players such as Amazon and Mercado Livre. In the last survey, Magalu registered advances on two fronts, but has a more contained growth. Trajano explains that the strategy has been to swap expansion for rentability. With high interest rates, installment payments without surcharges have become more expensive, requiring a strengthening of the operating margin to offset the increase in financial expenses.

The bet in physical space comes as an expansion alternative amidst lower competition. To the CEO, the Gallery is not just a branding action, but part of a central strategy for the group to act in multiple channels simultaneously. “This has always been what sets Magalu apart and will continue to do so. Now, we are changing levels in terms of multichannel acting, involving the whole ecosystem”, ends the CEO.