"Be brave. Take risks," wrote Brazilian novelist Paulo Coelho. "Nothing can substitute experience". 

Brazil is one of the world’s boom nations.

A rapidly growing middle class and the consequential boom in credit availability and consumerism are breaking the shackles of retail growth and experimentation.

Brazil’s retail sector is now as innovative as any in the developed world. And it’s growing increasingly international as global chains wake up to the opportunity in a country emerging from long term economic challenges.

The experience of South America is quite like no other country I have ever visited.

From the bustling metropolis of Sao Paulo (population 25 million) to the frantic pace of Rio through to the relative tranquillity of the rural areas all contributing to Brazil’s current national population of 193 million people.

There as a member of the ebeltoft group (www.ebeltoftgroup.com) a worldwide alliance of Retail consultants and to speak at the Latin American Retail Forum in September, I had a remarkable opportunity to understand retailing in this part of the world.

The Latin American Forum focused on global trends in multi channel retailing with particular emphasis on channel integration and media convergence.

A key theme was how the new world of retail, based on the trio of ‘connectivity, mobility and interactivity’, will incorporate all the possible uses of mobile phones for relationship, payment, commerce, communication and advertising.

And it will go further: the businesses of the future will be able to integrate stores, kiosks, television, internet and mobile to present an integrated vision of the consumers and to establish a much more consistent relationship with them, through the different channels and store formats.

The result will be the emergence of a customer-centric relationship, to be handled in a customised and exclusive way by industries, retailers and service providers.

The conference was truly international with speakers from Wal-Mart and Carrefour as well as Brazil’s own GPA, Cassa Bahia and Lojos Americana, speaking to a broad audience through translators in either English or Portuguese.


What was increasingly evident is that retailers around the world are all focussed on similar topics such as differentiation, intergration of multi channel communication and commerce with their targeted customers and getting the right product to their customer in the most efficient and profitable way.

Out in the malls

Brazil is one of the world’s largest retail markets. The sales in the industry have been growing strongly since 2003 and are expected to continue at this momentum only over the next few years as its constantly declining inflation rate allows for continued expansion of real incomes (increasing demand for non-durable consumer goods) and credit conditions ease (sustaining demand for durable goods).

A process of consolidation of the retail industry has been underway, but overall, the market remains relatively fragmented, indicating substantial scope for the larger players to grow their market share in future.

In stark contrast to Australia’s virtual duopoly, the top five supermarket chains account for approximately 40 per cent of total sales. Three players — Brazil’s Pão de Açúcar, France’s Carrefour and US’s Wal-Mart —currently dominate the market, with the rest accounted for by much smaller — typically local — chains, each of which accounts for little more than one per cent of the national market. Many of these are likely to be absorbed by the market leaders, as they seek to fortify their market presence through acquisitions.

Even more astonishing is the fact that supermarkets account for the majority of the Brazilian retail industry; and food accounts for more than 50 per cent of the total retail sales.

Global giants are broadening their foray into Brazil. Wal-Mart is opening new stores at the rate of 80 to 90 a year, Carrefour at around 70. But the local Pao de Acuar Group is leading the way with two new stores opening on average every week this year.

Plastic fantastic

The burgeoing middle class is driving massive growth in consumer credit availability.

For much of the middle class, their way of life is now credit: all retail purchases, including the weekly groceries, are charged to their card.

The retail supply channel is a blended mix of classic supply channel retail and financiers such as banks operating retail channels directly. The product simply becomes the financial enabler with compound interest rates in excess of 25 per cent being all too common.

Many consumers simply go from one week to the next paying their credit card committements and all large retailers of note seem to offer their own credit card facility, with ‘signing up’ booths at the entrance to most discount department stores, supermarkets, department stores and category killers.

Scale, consumerism and credit are the order of the day for Brazil retail with some interesting challenges and opportunities ahead.



For one, the scale of shopping centres as we know them is relatively small in Brazil with just 338 shopping centres open serving a greater population of 193 million people. By comparison, Australia has 1338 shopping centres serving 22 million. As you can see this is a large area of opportunity for Brazilian retail and development.

From a market economy to one of an urban economy to support this growing middle class is one of the first observations that you make. Sao Paulo for example has a population of 29 million and has two to three shopping centres that by our standards are equal to our well appointed shopping centres.

The very wealthy demographic of Brazil is said to be approximately one per cent of the population which still equates to approximately 19 million people, a market just a little smaller than the whole of Australia.

Wages average six to eight per cent of sales as the current labour rate is comparatively low to ours.

Retail standards are predictably mixed - from the beautifully appointed fashion speciality retailers in the more urbane areas, to the niche boutique retailers; from large department stores, discounters and hypermarkets through to the street traders. The one category that they do particularly well is the food offering with strikingly good retail. And many of those food offers are open 24-seven.

The Retail Doctor, Brian Walker, can be contacted on 02 9460 2882 or www.retaildoctor.com.au