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Year 11 - Issue # 400 - So Paulo, August, 15th, 2011 Phone: (5511) 3405-6666

Brazilian Retail News


Billabong opens rst 100% RFID shop in Latin America Australian Billabong, one of the worlds top surfwear brands, opened at Iguatemi Alphaville mall, in the Greater So Paulo area, the rst 100% RFID store in Latin America. The chipembedded goods are connected to the stores TVs and iPads, providing consumers entertainment and interactivity, as they will be able to access information on products in the dressing rooms, mirrors and in the checkout. The technology also eases the logistics processes, as goods can be tracked from the inventory to the checkout. Westeld shopping center group enters Brazil through JV Australian group Westeld, one of the worlds largest shopping center players, has partnered with Brazilian group Almeida Junior, owner of four shopping centers in the Southern region, to create a joint-venture of which each company owns 50%. The company will develop large and midsize malls all over the country and marks the rst time Westeld invests in a non-English speaking nation. Brazilian retail sales go up 7.1% in June In June, Brazilian retail sales went up 7.1% year-on-year, so said ofcial statistics agency IBGE. The result was above the 6.3% reported in May and led year-to-date sales to a 7.3% rise. Durable goods drove sales up, even over a strong comparison base, as in June last year the FIFA World Cup boosted the market. GGP bets on Brazil to grow The global crisis does not worry General Growth Properties (GGP), one of the US top shopping center groups and co-owner of Aliansce, Brazils third-largest mall group. Aliansce plans to invest R$ 632.2 million (US$ 395.12 million) until the end of 2013 to build four malls and expand another six. Today, the company runs 15 private-owned malls and manages another eight. Aliansce says it will continue growing based on greeneld projects. BRAZILIAN RETAIL NEWS 1 15/08/2011

Year 11 - Issue # 400 - So Paulo, August, 15th, 2011 Phone: (5511) 3405-6666

Brazilian Retail News


Foreign franchises double pace of entry in Brazil

The good performance of the Brazilian economy and the crisis in the developed markets made the country a top priority for the expansion of foreign franchising groups. The annual pace of entry of foreign franchisors in the country more than double in the last three years, compared to the 2000-2007 period, from four companies to nine, according to data provided by the national franchising association ABF.shops in 21 states. BFFC increases sales by 20% in Q2 Brazil Fast Food Corporation (BFFC), owner of Bobs fast food chain and Brazils number two company in the segment, said in Q2 its sales rose 19.8% year-on-year, to R$ 207.9 million (US$ 129.94 million), while operating prots rose 7.6%, to R$ 51 million (US$ 31.87 million). The companys net prots reached R$ 3.3 million (US$ 2.06 million), 11 times more than one year ago. BFFC ended the quarter with 805 stores under Bobs, KFC, Pizza Hut and Doggis brands in Brazil. Magazine Luiza sales soar in H1 Magazine Luiza, one of the countrys top electronics chains, said in H1 its sales soared 44.5% year-onyear, to R$ 3.44 billion (US$ 2.15 billion). Same-store sales went up 19.7% and in the Northeast total sales skyrocketed 80.6%, due to the acquisition of Lojas Maia chain. In Q2, companys sales jumped 38.2%, to R$ 1.74 billion (US$ 1.09 billion). Walmart creates Sustainable Goods category in its online shop Walmart expanded its online store with the opening of the Sustainable Goods category, offering more than 700 green products. Sales of this category are expected to double this year, due to a special presentation that informs consumers on the environmental benets of each item. The category will present six major branches: organic and natural cosmetics, energy, e-solidary, raw materials, alternate transportation and waste management. BRAZILIAN RETAIL NEWS 2

15/08/2011

Year 11 - Issue # 400 - So Paulo, August, 15th, 2011 Phone: (5511) 3405-6666

Brazilian Retail News


Momentum
New formats to new realities
Marcos Gouva de Souza (mgsouza@gsmd.com.br), CEO, GS&MD Gouva de Souza

Now it is time to Riachuelo announce a new generation of store formats, more compact and women-only. It follows other chains, as Marisa, with its underwear shops, and Renner, with more compact and jeanswear shops under private-owned brand Blue Steel, still an trial. The development of new retail store formats, t to new reailites, is a permanent process in the global scenario and is a response to the need to adapt or reinvent concepts according to the various changes continuously going on in the economic and business environment. The new formats shall create solutions for the problem of saturation in many markets, as in So Paulo and Rio de Janeiro. They must aim new segments that have increased their purchasing power, as happened to the midclass in Brazil. They shall face the challenge of serving customers that demand much more convenience, as happens worldwide; and shall also face the competition with new channels, as e-commerce and m-commerce, that brings in new behaviors to customers, making easier the access and product and price comparison in the digital world. In Brazil, the development of new formats to serve these different motivations is still in the beginning, due to the various growth opportunities still existing to the traditional formats in a period of market expansion. It is necessary, however, to be ready to understand these needs and to think in new alternatives to take advantage of this special moment of the economy, regardless foreign crisis, to expand market cover. Multiplying channels, formats, businesses, fascias and brands. And one needs to understand that Brazil is more and more facing different regional contexts, that must be understood and served in different ways, supported by a single platform. The new emerging shopping classes have their own view on what they want and, although they could only dream of using some products or brands, they can feel better if they have it all in an environment that ts their values and ambitions. The digital, multichannel and global Neoconsumers expect much more of their stores and brands. Their level of information, knowledge of goods and reference of brands is far above the non-digital consumers. For them, the traditional store format, specially the large surface ones, is inconvenient and old. Women, full of new challenges, facing multiple activities, more informed and empowered, want more convenience, easiness, services, updating and relationship. No matter how one looks at the market, it must be faced as a prism in which, depending on the light, we can identify a range of colors, creating new views. This is part of the new reality of the market and has been changing fast, reason why the rethink of new store formats must have as one of its most basic premises the exibility to allow for the possible adaptation to the consumers mutant behavior. And it must be present when choosing the place, design, equipment and, mainly, people in the stores. For the players that think in new store formats, the biggest mistake is to go to the simple thought of adapting the existing reality, looking to serve emerging demands. Rethinking store formats supposes a broad view and is a special opportunity to rethink its own infrastructure from the solutions found to serve a new market or segment. As for retailers as for the industry, to rethink store formats is usually a strategic mark in the history of the company, as stresses the customer-centric view, as companies were still fundamentally oriented to product, brand and product. Ralph Lauren, Nike, Apple, Adidas, Nespresso and Samsung are global examples, as Hering, Todeschini, Via Uno, Arezzo and Lupo in the domestic market.
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

15/08/2011