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Brazilian Retail NewsYear 11 - Issue # 415 - So Paulo, November, 28th, 2011

Phone: (5511) 3405-6666

Brazilian retail news 111/28/2011

Brazilian telecommunications agency Anatel said Brazil ended October with 231.6 million mobile

phone users, with 28.7 million activated this year. In October there were 4.3 million new users, the

fourth-better month in history.

Brazil has more than 230 million mobile phone lines

Spanish Charanga to open 40 stores in Brazil

MasterCard and Telefnica partner for mobile payments

Globex to open 210 new stores until 2014

Brazil to be strategic for Mattel in the next years

Spanish children apparel chain Charanga, who arrived in Brazil last January, intends to open 40 stores

in ve years in the country, considering private-owned and franchised shops, and then accounts for around

30% of its global sales. In the world, the chain has 230 stores.

MasterCard and Telefnica announced a joint-venture to offer mobile nancial solutions to Vivos 65 million

customers in Brazil. The initiative includes the creation of a mobile wallet that can be used by the consumersto do mobile payments and to transfer Money, pay bills and shop online. The companies say the solution

will speed up the acceptance of mobile payments in places that usually work only with cash, as taxi cabs,delivery services and dor-to-door sales.

Casas Bahia and Ponto Frio will have 210 more stores in the next three years, according to the strategicplanning revealed by Globex, holding owner of the two brands. Two-thirds of the new shops will be underCasas Bahia fascia, specially in the North and Northeast. Globex ended Q3 with 993 stores in 13 Brazilianstates. In 2012, the company plans to open from 50 to 60 stores, 60% to 70% of them in the Northeast.

Mattel announced Bryan G. Stockton as its new CEO, from January, 2012 on. Stockton has been headingMattels foreign expansion and analysts believe this will be one of the pillars of the company in the future. In

the last ten years, the international operations saw their presence rise from 36% to 50% of the groups total

sales. Brazil will be one important piece of the plan to increase foreign sales, and also to expand productionin emerging markets.

Po de Acar to open kiosks in stores to boost online sales

Emerging consumers already account for 61% of online sales

Grupo Po de Acar, Brazils top retailer,intends to speed up the installation of kiosks insideits supermarkets to sell products online. Accordingto the president of the company, Enas Pestana,the goal is to take advantage of the strong consumertrafc in the stores to stimulate online sales. The

executive also said the company has been studyingways to deliver products purchased via web also inthe stores, to leverage multichannel retailing.

The growth of the emerging midclass consumers shown a changing effect in the online retailing. Thismarket shall rise 36% this year over 2010, to R$ 20 billion (US$ 11.11 billion). People with family incomebelow R$ 3,000 (US$ 1,667) are 61% of online consumers.

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Brazilian Retail NewsYear 11 - Issue # 415 - So Paulo, November, 28th, 2011

Phone: (5511) 3405-6666

Brazilian retail news 211/28/2011

A Christmas dream

Marcos Gouva de Souza (mgsouza@gsmd.com.br), CEO, GS&MD Gouva de Souza

Momentum

Last week, the Indian government approved the so expected opening of the countrys retail sector to foreigncompanies, so they can own majority stakes. This measure was being postponed for at least eight years by the Indiangovernment, that resisted as much as possible to the strong pressure of the worlds largest retailers, stimulated topurchase goods made in India, but not allowed to expand and control retail operations in that country.

Indian GDP, considering the PPP criteria, would put the country into the worlds top ve, but retail accounts for lessthan 10% of todays GDP, while in Brazil, another country where retail has a share not compatible with the maturityof retail, the segment accounts for 15% of the GDP.

The Indian market, with a population of 1.2 billion people, was in 2010 and 2011 the second fastest growing retailmarket in the world, only behind China, and is overwhelmingly made of independent players, with around 15 millionfamily-owned stores. The top ten retailers own less than 4% of total sales.

The country has a very young population, being around 60% less than 30 years old and increasingly inuencedby the international culture, making them eager for global products, brands and services and, different from China,the growth of the population is not controlled, reason why it shall continue to go up in the next years.

Due to this expansion, the shopping center segment has been growing fast, and forecasts say in the next veyears more than 400 new malls will be opened.

The Indian retail market is one of the less mature of the top 20 nations researched by GS&MD Gouva de Souzato build the Global Retail Maturity Index (GRMI). This is why there will be, in the next years, a deep and dramaticstructural transformation, due to the increasing foreign presence, that will denitely reshape the local scenario and

the quality of products and services offered to that population.

Estimation show around 30% to 35% of all food produced in the country is lost during storage and transportation.Of the total population income, about half goes to food purchase, only 5% to apparel and footwear, and 3% tofurniture and electronics.

India has kept foreign retailers out of the country to protect local players, while trying to create conditions toincrease local competitiveness level, investing in education, information and several kinds of incentives. But, nally,it acknowledge this process has been taking way more time than expected and the population itself has beenhindered from high quality goods.

Until now, global players could only take minority stakes in local companies, except for monobrand operations. Thisis why international franchising groups partnered with local companies and started dominating the new shoppingmalls. Global retailers, as Walmart and Carrefour, could only take part on supplying independent players with

wholesale-type stores. Now theyll be able to, in cities and projects to be approved by the government, to directlycontrol their businesses, for some time still partnering with local companies. Somehow, this mirrors what happenedin China, where retail liberalization was gradual, with the government managing authorizations to new stores.

Partnerships with local groups shall be the rule of the business models to be built in the next years, due to theneed of market knowledge and understanding, in a country with social and cultural characteristics way differentfrom the Western world, where most global players were born.

But in these days Europe and the US, mainly, have been struggling with the global economic cooldown and growthforecasts for the next years are low, when not non-existing, the opening of Indian retail segment is the Christmasgift the global retailers have been dreaming of.

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 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: 01311-904Phone: (5511) 3405-6666 Fax: (5511) 3263-0066