Emerging Retail Trends in Brazil for 2013-14

June 24, 2013. Brazil is the darling for consumer and retail brands in Latin America’s growing consumer market, which in total is projected to comprise 661 million people with a combined GDP of $15.14 trillion by 2025. Trends that are being set in Brazil are likely to be good indicators of what can be expected in other fast developing markets in the region.

Here, we list 12 of the most noteworthy market trends in Brazil, some of which have been ongoing but are important nonetheless.

Store format evolution

1. Consolidation amongst regional players ““ As a way to penetrate second-tier states, regional brands such as Rede Andreazza are buying smaller ones, together with their existing stores in less developed states in Brazil. In 2012, 42 mergers and acquisitions were made in the Brazilian retail segment alone.

2. Smaller store formats – With hyperinflation a thing of the past, consumers are not hoarding household essentials as they used to. Retailers are hence choosing smaller store formats. With smaller footprints, retailers are also opening more stores in more districts. Instead of a few megastores, it is now common to find stores of all brands in almost all districts with even two or more of the same brands in a single district.

3. Stores serving C-class consumers ““ With the emergence of a C class with stronger consumption powers, retailers are creating secondary brands to target this segment with lower-cost products and simpler store formats in specific neighborhoods.

4. All night shopping ““ Some large retail brands are experimenting with 24-hour service in selected districts while smaller stores close late, at 10pm or at midnight.

5. Neighbourhood stores – Smaller stores that specialize in fresh agricultural and dairy products are beginning to sell a wider variety of products, including soaps, detergents, packaged juices and food, beer and bread etc., to compete with supermarkets.

6. Acceptance of debit and credit cards – While smaller “˜mom-and-pop stores only accepted cash in the past, now even small stores are accepting cards.

Product variety

7. Imported beers – Until recently, consumer could only choose between five to 10 brands of beer in Brazilian grocery stores. Today, one can easily find over 15 brands in some of the more upmarket grocery stores.

8. Specialized personal care – From daily shampoos, soap and other basic personal hygiene products, stores are now increasing the value-add of their portfolios with specialized skin care products, hair treatment products and higher-end personal care items.

9. Fancy domestic utensils – More sophisticated kitchen gadgets are appearing on retail stores. While not especially widespread, customers are gradually buying fancier kitchen accessories.

10. Electronic goods in hypermarkets – One can easily buy mobile phones, printers and even lower-cost tablets in hypermarkets thesedays. While not a new trend, the volume of sales of this sector in grocery stores has really picked up in the past 10 years.

Marketing & Promotions

11. Consumer research at check-out – With escalating competition, It is common for retail store staff to ask customers during check-out for their feedback on product variety, store cleanliness, air conditioning and music etc. One of the most popular questions is “Was there a product you wanted but couldn’t find?”.

12. Online promotions by consumer brands – Consumer brands from beer to household products, are more active on Facebook or Twitter, while retail brands are moving slower with online promotions, preferring door-to-door promotional leaflets.

Retail sales are expected to continue expanding in 2013. Supporting this trend are the favorable employment levels, low interest rates, and a high consumer confidence index. The increasing inflation ““ especially in the food sectors ““ has reduced the real growth of salaries, but is still not enough to change the increasing trend of growth of the Brazilian retail sector.

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