Year 10 - Issue # 398 - So Paulo, August, 02h, 2011 Phone: (5511) 3405-6666

Brazilian Retail News

Merger creates Brazilian largest drugstore chain
Drogasil and Droga Raia, two of the top ve drugstore chains in Brazil, announced yesterday a merger that creates the countrys largest retailer in the segment, with R$ 4.1 billion (US$ 2.56 billion) FY sales and more than 700 stores. The new chain, named Raia Drogasil, is Brazils 7th largest retailer and its management will be shared by the owners of Drogasil and Droga Raia, with 50% of the shares free oated in the BM&FBOVESPA stock exchange.

Consumer condence hits all-time high range

Consumer Confidence Index (ICC), measured by Fundao Getlio Vargas (FGV), rose 5.4% in July monthon-month, to 124.4 points, the highest level in the index, who started in September, 2005. The rise in condence reects the improvement of all components of ICC, specially the expectations for the next months (+4.9%, to 112.4 points).

Drugstore chains sales go up 19.6%

Data reported by the Brazilian Drugstore Chains Association (Abrafarma) show the sales of its members reached R$ 9.57 billion (US$ 5.98 billion) in the rst half of this year, 19.61% more than in the same period last year. Sales were driven by non-medicine, whose sales rose 27.66% and accounted for 29.5% of the entire segments sales.

IMC restaurant group prepares arrival in Colombia

With R$ 300 million (US$ 187.5 million) in cash, due to its IPO last March, International Meal Company (IMC) decided to bet on Colombia. The company announced the opening of restaurants in three airports, in Medelln (two) and Montera. The deal grants to IMC a total area of 1,330 sq.m. until 2022.

BRAZILIAN RETAIL NEWS

02/08/2011

Year 10 - Issue # 398 - So Paulo, August, 02h, 2011 Phone: (5511) 3405-6666

Brazilian Retail News

Po de Acar increases Q2 prots by 64%
Po de Acar, Brazils largest retailer, said its Q2 prots

soared 63,9% year-on-year, to R$ 91 million (US$ 56.87 million). The gure was boosted by a 61.5% rise in net sales, to R$ 11.3 billion (US$ 7.06 billion). Food sales rose 10.4% in net terms, to R$ 6.2 billion (US$ 3.87 billion).

Walmarts online retail sales to grow 60% this year

In Brazil, Walmart, the countrys third-largest retailer, forecasts this year its online sales will go up by 60%. The company started selling online in the end of 2008, with 10,000 SKUs. Today, there are sold 70,000 SKUs in 21 categories. In this semester, the company plans to double its distribution capacity, with the opening of a new DC in Minas Gerais state.

Carrefour management brings new series of conicts

According to Relatrio Reservado report, Luiz Fazio, president of Carrefour in Brazil, has been making many enemies. Its obsession in fullling the mission he received from the companys HQ to solve the companys nancial problems has been bringing troubles inside and outside the company. Internally, his centralizing style has not been popular. Externally, the relationships with some of the retailers top suppliers have been in turmoil, as Carrefour has threatened to stop purchasing if discount rates and payment conditions were not reviewed.

Abilio Diniz cancels meeting to discuss Po de Acar/Carrefour merger

Abilio Diniz, co-owner of Po de Acar with Casino group, has cancelled the Wilkes board meeting, scheduled for August, 2nd. Wilkes is the holding co-owned by Diniz and Casino that owns 66% of the Brazilian largest retailer. The meeting was supposed to discuss the proposed Po de Acar / Carrefour merger, but it lost all sense once Casino has rejected the idea.

BRAZILIAN RETAIL NEWS

02/08/2011

Year 10 - Issue # 398 - So Paulo, August, 02h, 2011 Phone: (5511) 3405-6666

Brazilian Retail News

Momentum
The changing potential of digital retailing
Marcos Gouva de Souza (mgsouza@gsmd.com.br), CEO, GS&MD Gouva de Souza

Only in the internet there will be sold in Brazil more than R$ 18 billion (US$ 11.25 billion), 40% more than in 2010. Considering overall retail sales are expected to rise in the 6%-8% range this year, the e-commerce retailing will increase its market share. There are no consistent data on the m-commerce sales, the other important arm of the digital retailing, due to the cross channel trend of many e-commerce sales done from a mobile phone. The fact is that digital retailing will be the fastest-growing channel in the next years, in spite of the problems faced by some leading e-commerce companies, overwhelmed by the ongoing growth and the lack of planning to cope with this demand, specially regarding logistics. A necessary cautiousness must be adopted when counting and analyzing these sales, not imagining them only as belonging to retailers. One must consider a growing number of suppliers have been creating their own relationship and sales channels, sometimes completely bypassing traditional retailers. This is the case of Nespresso, with its Club Nespresso project, that offers a relationship program and advantages for subscribers, selling goods in its e-commerce environment, directly to end consumers, not involving in the process its own retail operations. Its also interesting to notice the share of digital retailing sales do not necessarily follows the market potential, but can have a distinct behavior according to the level of familiarity, shopping disposition and characteristics of each market. This is one of the conclusions of the Neoconsumer 2011 study, performed by GS&MD Gouva de Souza and Ebeltoft Group in 15 countries. The study, being concluded these days, has considered Brazil as one of the markets where the Neoconsumer behavior is much stronger. Comparing data with what was found in the rst edition of the research, in 2009, it was once more proved and measured the disposition of Neoconsumers to adopt quickly the digital retailing alternatives, specially in some emerging markets, among them Brazil. One factor strongly driving the growth of digital retailing is the mix of factors including the increasing offer by retailers, suppliers and service providers, and the consumers emerging demand, as they, as get used to new generations of devices and more affordable data transfer prices, tend to become heavy users. In many markets, to new consumers the telephone land lines, due to the convenience of mobile communications. Another decisive aspect in the evolution of the several digital retailing channels is the level information, support, induction and relationship that can be created with consumers, leveraging the offered convenience and leading consumers to more rational and critical attitudes when comparing products, characteristics, opinions of other users and, mainly, prices and conditions. And one of the greatest challenges is that this consumer, oriented and educated in the digital retailing environment, leads this same demand to the ofine channels, demanding more information, services, conditions and convenience. The reinterpretation of this transformation has become one of the critical points of the new retail environment, generating the cross channel concept, evolution of multichannel. To get to know and to integrate this knowledge into benets perceived by consumers as such, leveraging results in several channels, is becoming the mantra of all professionals working in the digital retailing. The global experiences in this eld are already relevant enough to inspire other retailers and suppliers, not only selling products, but also services. And, in this case, what Apple has been doing all over the world, integrating products, stores, services, channels and information from an even more advanced knowledge of consumers clusters, has become an amazing source of experiences.

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 oor Paraso So Paulo Brazil Zip Code: 01311-904 Phone: (5511) 3405-6666 Fax: (5511) 3263-0066

BRAZILIAN RETAIL NEWS

02/08/2011