Brazilian Retail News

Year 10 - Issue # 377 - São Paulo, March, 07h, 2011

Phone: (5511) 3405-6666

Supermarket sales up 3.68% in January

Sales in the Brazilian supermarkets went up 3.68% in January year-on-year, according to national trade group Abras.
Over December, sales fell 21.15%, a predictable figure. This year, Abras forecasts sales will rise by 4% over 2010, below
the 4.2% of 2009.

Brazil is the world’s second largest franchising market

In 2010, Brazil reached the second spot in the world’s franchising ranking, with 2,226 chains, according to a Rizzo
Franchise report. Last year, there were an almost 15% growth in the number of franchisors, with 284 new brands. The
segment accounted for 7.5% of the country’s GDP, according to the study.

Shopping center segment forecast 12% FY

growth
Brazilian shopping center sales must rise by 11.95% in
2011 year-on-year, to R$ 97.4 billion (US$ 57.29 billion),
according to trade group Abrasce. This year, 25 new malls
shall be opened, over 16 last year. In 2010, sales rose 17%
over 2009, to R$ 87 billion (US$ 51.18 billion).

Drugstore sales rise 18%

Sales in Brazilian drugstores rose 18% last year, to R$ 17 billion (US$ 10 billion), according to the country’s trade
association Abrafarma. Sales of generic goods jumped 21% year-on-year, to R$ 1.7 billion (US$ 1 billion), while non-
medicine sales rose 20%, to R$ 4.8 billion (US$ 2.82 billion).

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Brazilian Retail News
Year 10 - Issue # 377 - São Paulo, March, 07h, 2011
Phone: (5511) 3405-6666

Magazine Luiza to do IPO next April

Magazine Luiza, Brazil’s third largest electronics retailer, announced its IPO in São Paulo Stock Exchange. The goal is
to raise up to R$ 2 billion (US$ 1.18 billion) with the operation, to be done in April. The resources will be used to open new
shops, refurbish old ones and prepare the company for a faster growth, including the purchase of smaller regional chains.

Pão de Açúcar to invest R$ 1.4 billion this year

Grupo Pão de Açúcar, Brazilian largest retailer, intends to invest this year R$ 1.4 billion (US$ 0.71 billion), 18.4%
more than in 2010, when it had already invested 64.7% more than in 2009. The number of new stores was not revealed.

Car sales up 23% in February

Car sales went up 11.08% in February month-on-month and 23.06% year-on-year, to 430,040, according to the National
Car Dealers Association (Fenabrave). Year-to-date sales have reached 817,190 units, 18.05% more than in the same
period last year.

Supermarket segment to employ 5% more people this year

The São Paulo State Supermarket Association forecasts supermarketers will hire 5% more people this year. Today,
the segment employs 240,000 people directly in São Paulo state alone.

Giraffas to open five shops in the US

With a 26% sales growth last year, Brazilian fast food
chain Giraffas intends to keep growing in the two digit range
this year (the goal is to reach R$ 600 million sales, over R$
520 million last year) and to open 60 stores in Brazil and
five in the US, where the first store was opened in 2010.

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Brazilian Retail News
Year 10 - Issue # 377 - São Paulo, March, 07h, 2011
Phone: (5511) 3405-6666

Momentum
The leading employer
Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza

Last year, according to data from the Ministry of Labor, revealing in firsthand data from the General Employed and
Unemployed People Register (Caged), there were generated 2.5 million formal jobs in the country, 19.8% of them in the
retail segment.
The government remains as the largest formal employer in the country, with around 8.8 million people; followed by retail,
with a little more than 6.9 million. The latter, however, is the fastest-growing one, and shall remain this way in the next years.
Employment in Brazil lives a specially upbeat moment, with historically low unemployment rates, reaching 5.3% in
December and presenting in 2010 an average of 6.7%, below the 8.1% of 2009 and 7.9% of 2008, as a consequence of
the economic growth the country has been experiencing in the last years, in spite of the global crisis.
The expansion of the number of jobs in retail relies on the growth of the segment: 10.9% in 2010, after rising 5.9% in
2009, leveraged by the credit offer rise; by the improving income of population; by the evolution of the job market; and by
the rising consumer confidence. These factors have been making family spending grow, thus speeding up retail sales.
Different from other economic segments, in which growth has been leveraged by more technology, automation,
robotization and other resources, retailers, when expanding, need to hire more people to work in the stores, distribution
centers, financial services and infrastructure, also creating jobs along the distribution chain, as products and services
suppliers also grow in the process.
The expansion of the industry, for example, has been done with less additional jobs created, as processes become
automatized. The same has been happening in the large scale agriculture or in a part of the construction sector, due to
the incorporation of newer and more modern technologies.
The almost 140,000 direct collaborators of Grupo Pão de Açúcar the country’s largest retailer, are almost the double of
all jobs created by the automobile industry. When the government, in the end of 2008, however, was looking for alternatives
to activate the local economy facing the danger of the effects of the global crisis, the first initiative was reducing taxes for
the automobile industry, in a clear sense of lack of sensibility to the segment that is in fact the largest private job creator.
If the Institute for Retail Development (IDV) had not worked hard to show this reality, the tax cuts would not have been
extended to electronics, a category with a much broader appeal. Later, the benefit was offered to building supplies, and
then to furniture.
This lack of sensibility has proved to be chronic, as the government, specially the Ministry of Labor, unaware of the
segment’s reality and of its ability to generate new formal jobs, have been creating rules that, instead of stimulating job
creation, have become an added hurdle for this expansion.
Even with these troubles, the retail segment shall continue to lead the growth of private jobs, only competing head-
to-head with the strong (almost uncontrollable) and undesirable expansion of the government structure. With a crucial
difference: in retail this growth has been occurring directly to improve services and businesses, as companies grow to
reach new markets, consumers and realities.
Some more knowledge of the segment’s environment would certainly help retailers to give a stronger contribution to
the country’s economic expansion. It’s just a matter of greatness. Some common sense and vision.

Gouvêa de Souza & MD Desenvolvimento Empresarial Ltda.

Av. Paulista, 171 - 10º floor
Paraíso – São Paulo – Brazil – Zip Code: 01311-904
Phone: (5511) 3405-6666 – Fax: (5511) 3263-0066
E-mail: gsmd-de@gsmd.com.br
Home-page: www.gsmd.com.br

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