Brazilian Retail News

Year 10 - Issue # 396 - So Paulo, July, 18

h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 1
18/07/2011
Brazil withdraws support for Po de Acar -
Carrefour deal
The Brazilian government has backed away from plans to
support a deal between one of the countrys major retailers,
Po de Acar, and the local operations of Carrefour. The
controversial and complex deal depended on fnancing from
BNDES, a state development bank. There is disappointment
with the way the deal was handled ... and (Rousseffs)
Cabinet has decided to withdraw government support for
the (BNDES) fnancing, according to a government offcial.
Brazilian retail sales slowdown in May
Data released by the offcial statistics agency IBGE have shown Brazilian retail sales had in May a 6.2% growth
year-on-year, below the 10.2% reported in April. Year-to-date sales have risen 7.4% over the frst fve months in 2010.
Including automobiles and building materials, sales rose 12.8% year-on-year, above the 12% reported in May. Other
durable goods segments, as Furniture/Electronics (+20.4%) and Computing/Communications (+14.7%) have also had a
strong performance, showing credit offer has continued to drive retail sales up.
Fogo de Cho opens frst restaurant in Rio de Janeiro
Brazilian Fogo de Cho restaurant chain, famous for its gacho-style barbecue meals, has opened its frst unit in Rio
de Janeiro, in the Botafogo neighborhood. Able to host 450 customers simultaneously and with a view to the Sugar Loaf
mountain, one of Rios trademarks, the place was built under Sporting complex Mourisco Mar, another city landscape.
Consumer satisfaction continues to drop
The National Consumer Satisfaction Index (INSC) kept in June its downward trend, started in May, falling from 61.3%
to 60%. Last month, supermarkets (from 84.6% to 79.3%) and telecom (from 50.6% to 45.8%) were the segments with
strongest drops. The best-evaluated segment was Personal Care, with 84.3% of satisfaction.
Brazilian Retail News
Year 10 - Issue # 396 - So Paulo, July, 18
h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 2
18/07/2011
Governments gives green light to Insinuante/
Ricardo Eletro deal
The Ministry of Treasurys Economic Following Secretary
(Seae) announced it will recommend the antitrust authority
Cade to approve, without restrictions, the merger of
Insinuante and Ricardo Eletro electronics chains, who
formed last year Mquina de Vendas, the countrys second
electronics retailer. Prior to Cade, however, the 70-page
study will be analyzed by the Justice Ministrys Economic
Rights Secretary (SDE), who uses to follow Seaes decisions.
Brazilian online retailing attracts foreign private equity funds
TIn the Global E-commerce Summit, one of the worlds top online retailing events, in the United States, companies and
private equity funds from Spain, Italy, the Netherlands, France and the United Kingdom have shown interest in investing
in Brazilian companies, due to the strong growth of the middle class, who has been boosting the PC market.
Language teaching chain Yes! to expand
foreign expansion
Language teaching chain Yes!, with 105 units in 12
Brazilian states, will open until the end of the year its second
school overseas. Following one unit opened in Miami, the
second will be in Boston until the end of the year, in a move
to reach the strong Latin community in the US.
Pague Menos expects sales to grow 20% in 2011
Preparing its IPO for 2012, drugstore chain Pague Menos has forecast a 20% sales growth this year, over the R$ 2.2
billion (US$ 1.38 billion) of 2010. Although strong, the growth, if confrmed, will be below the average 24% reported in
the last decade.
Brazilian Retail News
Year 10 - Issue # 396 - So Paulo, July, 18
h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 3
18/07/2011
Walmart launches second step of
sustainability supply chain program
Walmart, Brazils third-largest supermarketer, has
partnered with 13 FMCG companies to develop greener
products. The company presented the second step of its
Door-to-Door Sustainability program, under which consumer
goods companies launches more sustainable versions
of their leading products. Among the suppliers are top
industries as Ambev, Danone, Kimberly-Clark, Kraft Foods,
LOral, Mars, Philips, Reckitt Benckiser and Sara Lee.
Inbrands postpones IPO
Inbrands fashion group, owner of brands as Ellus, Richards, Alexandre Herchcovitch and Salinas, will not advance, by
now, in its IPO project. The company was expected to announce the price of the stocks this week and intended to raise
around R$ 500 million (US$ 312.5 million), mainly to purchase another high-end fashion brands. The economic turmoil in
Europe has made the market not as attractive as before, thus postponing the IPO, probably to the end of the year.
C-stores average sales soar 20.1%
Convenience stores have been more and more presente
in the Brazilian consumers everyday life. According to the
annual trade group Sindicoms survey, average sales rose
20.1% in 2010 year-on-year, to R$ 6.30 (US$ 3.94) per
transaction. In the country, there are 6,153 c-stores inside
gas stations, fgure expected to rise to 6,872 this year and
to more than 10,000 by 2015.
Brazilian Retail News
Year 10 - Issue # 396 - So Paulo, July, 18
h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 4
18/07/2011
Consolidation and competition in the global retailing
Marcos Gouva de Souza - CEO, GS&MD - Gouva de Souza
Momentum
Consolidation rhymes with competition and it is an irreversible move that cant be helped, only managed. It has happened in
a growing scale globally, due to the increasing empowerment of consumers.
Much more informed, disputed and independent, the consumer has become much more volatile in its behavior, reserving
his fdelity exclusively for whom offers him value, defned as the mix of options that could bring him more benefts (the product
or service itself, convenience, warranties, rights, added services and so on) for the lower cost, considering aspects as price,
conditions and time.
In the essence, this equation defnes the origin of the global market transformations that, having consumers in the center,
create an open rule of more for less in each given moment, only leveraging the competition between brands, channels,
products, stores and services.
This process has been speeding up fast from the advance of the internet and mobility, turning to the virtual world all the
consumers learning curve and imposing even higher challenges to the companies who want to serve them.
Of the market tools available to cope with this process, mergers and acquisitions have always been the most effcient, as
they allow for synergies, focus, improving effciency and better results, always and only when able to give consumers the direct
benefts of this action.
So, FMCG industries advanced worldwide to purchase brands and market share to achieve greater scale. Unilever, P&G,
Nestl, Coca-Cola and Pepsico are some good examples of this move, making them leaders in several countries, with signifcant
and growing market share. As much as in the automotive industry, with GM, Fiat, Ford, BMW, Renault and others. Or in the
telephony market, with groups as Telefnica, Telekon, Orange and others with dominant presence in several countries.
In the retail scene, this process has also been natural. The Federated-Bloomingdales-Macys conglomerate in the US
department store segment is just an example. Groups as Carrefour, Casino and Auchan in France; Tesco in the United Kingdom;
Metro in Germany; El Corte Ingls in Spain; and Rinascente in Italy, have moved in this direction, not only in their home markets,
but also in many emerging countries in Asia, Latin America, Africa and Eastern Europe. The same way as Walmart has been
doing, since long moving from an organic growth strategy to focus on a faster expansion through mergers and acquisitions in
Brazil, Mexico, the UK and, more recently, Chile and South Africa.
Trying to balance the market share of all players, the State has been trying to manage this process, but usually only when
companies go deeper in the M&A path. Sometimes this presence can be disastrous, as happened in France from the 70s on,
when many mechanisms to protect independent players were created and many corporations started looking for opportunities
outside Europe.
Today, we live the perspective of a new thrust of global competition level in all market segments and the process can always
be improved, aiming for a better set of rules and the creation of investment and capitalization tools for smaller players in the
industry and distribution segments, so they can survive and develop exclusively due their ability to adapt.
But one cant ignore that accepting consolidation in some industry sectors and not letting the same happen in the distribution
end leads to a dangerous unbalance in the consumer protection.
The market share of the top fve supermarketers in Brazil is way below the one in France, the UK, Spain, Mexico, Belgium
and Chile, just to name some countries. And, if taking into account the Brazilian food market only, this share is even lower, as
the distribution is a very unconsolidated market, the informal market is still strong and the relevance of food in the supermarket
sales has been dropping in the last years.
Nothing very different of what happened in the past in other countries. And a move that should not be stopped, as one cant
change the market-and-demand rule. What, its worthy to say, has been tried some times.
Its possible to manage the process, but not to stop it.
Brazilian Retail News (BRN) is a weekly newsletter published by GS&MD - Gouva de Souza with the most important news
on the Brazilian retailing. The content can be freely used, once the source is quoted. If you want any information on BRN or our
services, please send an email to publicacoes@gsmd.com.br or access GS&MD - Gouva de Souza at www.gsmd.com.br.
Gouva de Souza & MD Desenvolvimento Empresarial Ltda.
Av. Paulista, 171 - 10 foor
Paraso So Paulo Brazil Zip Code: 01311-904
Phone: (5511) 3405-6666 Fax: (5511) 3263-0066