brazilian retail news 408, october, 11th

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Brazilian Retail NewsYear 11 - Issue # 408 - So Paulo, October, 10th, 2011

Phone: (5511) 3405-6666

Brazilian retail news 110/10/2011

In Brazil, direct sales rises 8x faster than worldwide

The direct sales market had in 2010 a 2.1%

growth year-on-year, excluding the Chinese

market, until then not included in the statistics,

so said global trade group WDFSA. In Brazil,

according to local group ABEVD, sales rose 17.2%

in 2010 year-on-year, but this year the growth has

been slower, as the segment rose 8.9% in Q1,

to R$ 5.8 billion (US$ 3.27 billion). FY sales are

expected to rise in the two-digit range.

Franchising segment to top R$ 100 billion next year

Brazilian franchises shall end this year with

total sales around R$ 86 billion (US$ 48.5 billion),

according to franchising association ABF. For 2012,

forecasts point to a 15% YOY growth, to R$ 100

billion (US$ 56.49 billion), due to the opening of

more than 20 new shopping centers scheduled for

the next year, the income growth in smaller cities

and the 20% expansion of microfranchising chain.

M-internet soars 60% in Brazil

Brazil is the fastest-growing country in web

access from mobile phones and tablets, accordingto comScore. This year, the gures have gone up

60%, but they account today for less than 1% of

total internet data trafc.

French group Casino purchased an additional2.2% of preferencial shares of Grupo Po de

Acar, Brazils top retailer, thus owning 48.1%

of the company, directly or through its controller

Rallye. The company affirmed that the new

purchase stresses the condence and commitment

it has in Brazil and GPA. Since the conversations

between Abilio Diniz and Carrefour for a merger

leaked to the press, in June, Casino has been

increasing its stake in Grupo Po de Acar, from

33% then to 48.1% now.

Casino increases stakes in Grupo Po de Acar to 48.1%


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DIY sales up 6% on year

Brazilian building supplies retailing saw its

sales go up 6% in the rst nine months of the year,

according to a survey released by retail trade group

Anamaco. In September, sales went up 2.5% year-

on-year and 1.55 over August. The trade group

forecasts this year sales will rise in the 6% range,

even with a strong comparison basis and the

worsening of the global economic scenario.

Po de Acar partners to recycle electronic waste

Grupo Po de Acar partnered to the Brazilian

Association of Special Waste and Public Cleaning

Companies (Abrelpe) to install permanent and

pop up facilities to provide reverse logistics and

recycling of electronics waste. This is the rst

initiative a large retailer has been doing since the

approval of the National Solid Waste Policy last

year, that makes companies accountable for the

reverse logistics of several products. The initiative

will start this month with permanent kiosks in four

hypermarkets in So Paulo and several pop up

initiatives in the country. Until 2014, the goal is

to collect e-garbage in the cities that will host theWorld Cup.

PC market grows 25% on year

In the rst eight months of the year, computer

sales soared 24.8% over the same period in 2010,

to 5.8 million equipments. According to GfK, the

gure was leveraged by a 44% rise in laptop

sales, who accounted for 50% of total volume

sold. In August alone, laptops accounted for 53%,

boosted by an 18% drop in the average price of

the equipments, to R$ 1.430 (US$ 807.91).


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The growing relevance of services in retailing

Marcos Gouva de Souza ([email protected]), CEO, GS&MD Gouva de Souza

Momentum

The evolution, importance and opportunities services bring to the retail business were some of the issues morestressed last month, during the 14th Latin American Retail Forum, in So Paulo. The event highlighted the globaland local examples that have become the benchmarks in these opportunities and the relevance the use of servicesas a competitive edge for retailers, specially when technology expands the possible alternatives to add value toproducts sold or to create product-services that bring added revenues and prots.

Specially in the most mature economies, services have increased their share in the GDP of the countries and todayaccount for around 68% of the total economies, but one must also acknowledge the expansion of this category in theBrazilian household expenses, specially in the B and C income groups, as a consequence of changes in spending

patterns, as shown by statistics agencys IBGE data.

Services in retail have been living their 5th step of their expansion cycle, the one that makes all services incubatedin the store environment to mature and become independent operations, as it happens in Spain, with El Corte Inglstravel agencies, or in Germanys Tchibo; or in French Fnacs service stores.

In their previous ages, services migrated from the most basic and convenient inside the store environment (garmentadjusts, money exchange or gift wrapping), mainly in the large department stores and specialized shops; and haveevolved, in successive waves, going to value added and differentiation services, related to products sold at stores,as is the case of fashion consultants, architects and sporting support, customizing projects and demands. This isthe case of Decathlon, offering in all stores technical support, installation and product customization; and also whathappens in REI sporting goods chain, offering courses and orientations for outdoor sporting goods fans.

The third wave, of the nancial services, is still the most important and relevant, having the larger share in the

pool of retail services, accounting for the larger share of revenues and incomes. A BCG study estimates that inCarrefour, globally nancial services account for 5% of its Ebit. In Spanish El Corte Ingls, 4%, as in US Best Buy.British Tesco is where nancial services are most relevant: 11% of its Ebit.

The 4th wave is made of services non-converging products sold at the stores, as happens with Carrefour, Tesco,El Corte Ingls, Tchibo, Almacenes Paris and Falabella selling travel services; and also in the telephony services,specially in the mobile world, as MVNOs have been rising. In Brazil, this business model has been approved recentlyand in the next months the rst movers will be offering their solutions.

The mix of services offered by retailers could also be classied as the ones related to products, as projects orinstallation offered by furniture-specialized stores; or other people-related ones. In this aspect, is remarkable the moveUS retailers have been doing, specially in the drugstore segment, but also Walmart and Costco, building health careservices in their stores to attract and retain customers who look for solutions even more convenient to their needs.

Carrefours Planet hypermarket reinvention project, started in France last year, uses services as a key element,expanding space dedicated to nancial services, travel agencies, personal care and hair dressing services inside thestores, but also adding telephony and food services, with snack bars and restaurants inside the stores. As happenswith many retailers in their digital channels, who have been using internet and mobile phones to sell theater andshow tickets, travel and many other services, approach used in Brazil by Livraria Cultura, Saraiva, Americanas andSubmarino, among others.

The denite aspects for the growing importance of services for the revenues and prots of retailers worldwide, inthe brick-and-mortar or digital environment, are convenience, more and more demanded and valued by consumers;and, mainly, the search for differentiation alternatives that allow for improving performance, in a scenario polarizedby the growth of discount and low-price alternatives, looking to create new business models and store formats thatattract and retain consumers.

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 ourservices, please send an email to [email protected] 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 408, october, 11th

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