Listed as the world’s fourth largest emerging market at the moment, Brazil is enjoying its growing popularity as a potential retail sector which is predicted to boom tremendously over the next few years owing largely to the two major global sport events – the 2014 FIFA World Cup and Rio 2016 Summer Olympics slated to happen in Brazil. Benefiting from major investments in its infrastructure, supported with an escalating emergence of middle class that is empowered with good purchasing power and access to credit, and unprecedented success of multi-nationals such as Walmart and Carrefour in the retail sector which is worth about US $ 230 billion at the moment, numerous retailers are sensing plenty of opportunities to build bridges to the country’s consumers…
Encouraged to spend rather than save, observed is a rise of a strong Brazilian middle class, defined as a new class of employed people who are borrowers with the ability to repay. Pumping in a rapid credit growth in their domestic economy, this new generation of consumers earns between US $ 690 and US $ 2,970 a month, growing from 38 per cent of the population in 2003 to 55 per cent of Brazil’s 191 million inhabitants in 2010, expected to develop further till 2015. Extremely fashion-conscious, these Brazilians display a typical shopping trait swayed by clothing lines endorsed by local celebrities, and tend to purchase apparel on credit more frequently, than consumers in other emerging markets, making fashion an important element of the country’s growing economy and lifestyle at large.
A tremendous diversity of apparel retailers today form the backbone of the sector, as unlike the grocery and household appliance market, local and traditional brands dominate the apparel and fashion sector in Brazil, the world’s fifth largest apparel marketplace. With more than 60 per cent of the country’s population below the age of 29, the apparel market has been growing 7 per cent year on year. Most of the retailers have pursued a multi-pronged approach which includes neighborhood supermarkets, hypermarkets, convenience stores, discount stores, and online stores to reach out to a lucrative customer who is extremely price-conscious compared to their peers in India, China, and Russia, and who finds shopping as a relaxing, everyday activity where they expect to be treated royally, in retail shops located closer to their homes.
Keeping this shopping crazy consumer in mind, international designer brands such as Diane von Furstenberg, Missoni, Chanel, Gucci, Louis Vuitton and Burberry have already made large investments in the market opening stores in major urban centres – mostly in São Paulo, but also in the capital city Brasilia, a fast-emerging market for luxury goods. Not only luxury brands but retail giants such as Walmart and France’s Carrefour are also banking on the Brazilian market to make up for sagging sales elsewhere, banking on people who are looking for affordable fashion. While Carrefour has had a significant market presence for over two decades in Brazil with a market share of about 14.5 per cent, Walmart Brazil has a market share of 12 per cent, and Pao de Acucar by far the biggest diversified retailer in Brazil, selling everything from groceries to home appliances to clothing, enjoying a share of
about 18 per cent.
But what is even more interesting is the fact that Brazil is also one of the few countries in the world which has a major fashion industry of its own. Based on the country’s relative geographic isolation since the past few decades, Brazil is known to have its own production, its own artists, and even its own trade that has made it less dependent on other countries when it comes to sourcing fashion. Local labels are able to produce their goods using mostly domestic materials, which is not that surprising considering Brazil’s abundant natural resources and a strong textile industry of its own. Supporting this are consumer trends that include the fact that Brazilian consumers seem to bet on their own designers, as much as they do on foreign brands. Even those who can afford to buy from big European houses like Prada or Valentino deliberately seek out Brazilian designers and therefore there are countless Brazilian ready-to-wear and accessory brands which have been highly successful with domestic consumers and are now setting their sights outside Brazil. Popular names include discounted clothing retailers like Lojas Americanas, Lojas Renner and CIA Hering.
Being the host to the two most awaited world sports events more and more travellers from not only the neighbouring US but different parts of the world have shown interest in travel to Brazil, boosting its tourism dramatically. Expected to follow the same pattern of new store openings, expansions and growth in pop up retail, that London witnessed in the past year, due to the ongoing fever of Olympics 2012 – Brazil is now the next hot destination for apparel retailers who have not yet ventured into the market.
