What retailers need to know about Brazil

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Retail’s BIG ShowBrazil is on its way up, and not just to the top of my travel wish list. With its growing middle class, booming economic growth, and, of course, its beautiful landscape, many investors and world retailers have been eyeing Brazil over the past few years. And while reports reveal that growth has slowed recently, the country remains a prime target for retailers.

As part of our retail thought-leader series leading up to the NRF 101st Annual Convention & EXPO in New York City, Jan. 15-18, we asked Alberto Serrentino, senior partner at GS&MD – Gouvêa de Souza in São Paulo to share some insights about the Brazilian retail market, how the global consumer is changing, and why his team has been coming to Retail’s BIG Show for more than 20 years.

At Retail’s BIG Show, you’ll be discussing opportunities within the current Brazilian retail market. What makes Brazil such an important global retail player?

Alberto Serrentino, Senior Partner, GS&MD – Gouvêa de Souza Brazil is a fast growing market that, since 1994, with the stabilization of the economy, has matured a lot. In the last decade, the growth of the country has created a large mass of new consumers, opening many expansion opportunities for Brazilian and foreign chains.

The country has been living a very special moment and will continue to do so in the next years. Brazilian retail is mature and competitive and has been attracting a growing interest from foreign companies.

What are the biggest opportunities for retailers entering the Brazilian market?

Brazilian retail is still too fragmented and regionalized. There are only a few really national chains, basically in apparel and supermarkets. So, there are many opportunities for companies willing to invest in private-owned or franchised stores. There are opportunities for green-field entrance, or by acquisitions.

As the market has several specific characteristics, however, foreign investors and retailers need to rely on local market knowledge, someone who understands the regional flavors, the country’s complex tax system, the competitive environment and the consumer spending behavior.

What do you think other companies around the world can learn from Brazilian retailers?

By nature, Brazilians are flexible and innovative. So, Brazilian retailers share these characteristics and know how to deal with difficulties and fast changes. They also grew up in a very unstable environment, so they are aware that crises come and go. Another important fact is that Brazilian retail is very developed regarding credit and payment tools.

Your firm has done extensive research on consumer behavior in several countries. What are the most important ways you are seeing consumer behavior change across the world?

Worldwide, we’ve seen the growth of what we call the Neoconsumer. It’s that global, multichannel, digital consumer who uses several shopping channels and makes retail competition global. This consumer can, using his smartphone, see that products in the store can be purchased at a lower price on a website from another country, and get the deal instantly. This brings amazing challenges to retailers. They will need to go way beyond price and product to make consumers loyal.

Besides that, with less time available, consumers will demand more and more services. Retailers will also need to help consumers solve problems. Offering solutions will be one of the greatest drivers of success over the next few years.

In Brazil, we’ve been experiencing huge demographic changes. In the last seven years, 30 million consumers migrated from poverty to the emerging middle class, leveraging the domestic market and changing everything. The growth of new consumers in large emerging markets will create opportunities for companies able to understand this process.

In addition to presenting at Retail’s BIG Show, you’ll also be bringing one of the international delegations from Brazil to the event. Who will be coming with you this year?

There will be more than 200 retail executives with us in 2012, including CEOs, presidents and executives of some of the country’s top companies, such as Grupo Pão de Açúcar, Riachuelo, Magazine Luiza, Máquina de Vendas and O Boticário.

Tell us about your history with Retail’s BIG Show. How long have you been attending, and why do you feel it is so important to come each year?

We’ve been going to Retail’s BIG Show for almost 20 years. When we started, the U.S. market was another world entirely, a reality completely different from ours. We watched the evolution of technology, the diversification of store formats, and wondered when Brazil would reach this level of sophistication.

Since then, our country has changed a lot and the BIG Show has become more and more interesting for Brazilian retailers because as U.S. and local retailers started inching closer, we could then exchange experiences. Today, in many aspects Brazil is in no way behind other retailers around the globe. And to be in New York every January is an amazing benchmarking opportunity with the world’s top players.

What are you most looking forward to at this year’s event?

Besides Bill Clinton’s keynote speech? Well, we’re looking forward to the discussions on mobile retailing and cross channel. Those will be hot topics for Brazilian retailers. These are the areas in which the country’s companies are looking for benchmarks and want to learn from those who have already developed solid initiatives. Brazilians will also be interested in the discussions on the global economic scenario and its consequences for retail and shopping behavior.

We hope you’ll have some time to enjoy your trip when you come in January. What do you enjoy most about New York City?

The city is awesome, a fantastic place to be. Our program during Retail’s BIG Show is very intense, but we always manage to have some free time. New York is the center of global retail, and every year there are new stores, new concepts that show innovation is endless and creativity can always surprise you! It motivates our delegation to come back every year.  There are some executives that have been going with us for 10 years and never get tired of Retail’s BIG Show or New York!

For more information about what’s happening at Retail’s BIG Show this January, visit www.nrf.com/annual12.

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