Job Brazil
Six Trends that will Shape Brazil's Consumer and Retail Market
Consumer and retail businesses in Brazil can anticipate a promising future. Employment rates and consumer groups are growing, while political risk, economic uncertainty and inflation continue to stabilize. Overall, the retail market grew by 15.7% in 2009; slightly over the 14% forecast growth. The segments presenting the highest growth were automobiles, at a record 32%, furniture and domestic appliances (25%), clothing and shoes (16%), tobacco and beverages (15.5%) and pharmaceutical and cosmetic items (15%).
Boosted by an increase in the level of salaries and a reduction in unemployment, the retail segment in Brazil avoided the effects of a stronger negative GDP brought about by the reduction in exports and foreign direct investment in the country. The emergence of the C SES level, those who receive a maximum of US$2,700 per month, was and still is one of the main pillars of such growth. This group now receives 46% of all salaries paid, against only 37% in 2003.
The rise of Brazil retail market
Over the years, many Brazilian companies have become more competitive and innovative in most segments. Procurement and purchasing have become very sophisticated, along with the rise of cost and pricing specialists. Innovative sales promotions and services are backed by customer surveys and trend analysis and help enhance the typical Brazilian shopping experience.
Examples include in-store wine cellars and extended services, from in-store beauty and gastronomy consultants to food and photo printing kiosks, or extended warranties to mobile recharges and flash promotions at cash registers.
Brazil is also probably the most advanced and demanding country in Latin America, in terms of innovative and creative advertising campaigns, and has been leading in this area for at least two decades. Brazilian agencies are constantly winning international awards for their creative advertisements for consumer brands.
Besides creating great advertisements, some social media groups are now being monitored by larger retailers, who are also ‘twitting' their promotions to an increasingly larger group of connected consumers. Price differentiators are no longer the sole tool to attract and retain a client that demands good service, variety, and good pricing – all this to be reported in some sort of forum or online group afterwards.
The intense degree of competitiveness is also expressed in advertising campaigns where some companies appear to be edging ever closer to the limits allowed by legislation.
When traditional tools seem to be exhausting their power, innovation will determine success or failure. To excel in the future, consumer and retail companies in Brazil should dedicate time to understanding their constantly changing groups of customers in a constantly changing environment.
Six trends that will shape the market
How companies fare in the future will be determined by how well they capitalize on six important market trends that will shape the consumer and retail industry. Here are some predictions about where the market will be heading.
1. Continued consolidation
Many local consumer and retail companies have been turning to mergers and acquisitions (M&A) in order to capture economies of scale, fight off domestic and foreign competition as well as secure leadership positions within their segments. Several have become multibillion-dollar market heavyweights in the last 12 months alone.
With companies like Unilever reporting Brazil as their second largest market; making up 21% of global sales and contributing US$6 billion per year to the fast moving consumer goods (FMCG) company; international consumer and retail players are increasingly finding Brazil attractive.
Indeed, Brazil will remain one of the top M&A destinations within the global consumer and retail landscape for several important reasons:
Latin American hub
Due to its geographic position, level of industrialization and developed services industry, Brazil is considered a hub to Latin America. Argentina is the second most important destination of Brazilian exports after the US, while Chile, Colombia and Mexico are located just around the corner, so to speak.
Base for manufacturing
FMCG products such as personal hygiene goods, consumer electronics such as mobile handsets and domestic appliances, as well as processed foods such as potato chips to frozen vegetables, are manufactured in Brazil and shipped to neighboring countries.
Robust economic growth
Sound economic development as well as two long-awaited events; the 2014 World Cup in Brazil and the 2016 Olympic Games in Rio de Janeiro; are certain to boost the infrastructure, telecommunications, retail and services sectors, among others. GIA estimates that an estimated 2 to 3 million new jobs will be created in Brazil over the next six years.
Large domestic market
One important consequence of the recent growth in Brazilian economy has been the emergence of the "C SES level", represented by over 40% of the population that is steadily migrating from poverty levels into consumer levels. In addition to this, the sheer size of Brazil's entire 190 million population cannot be ignored.
Prediction: Brazil will reduce its dependence on foreign investment, as local companies continue to grow, consolidate and benefit directly benefit from a stronger internal market.
2. Impact of social media trends
E-commerce in Brazil has been growing at over 30% per year since 2000, reaching close to US$ 5 billion in 2009 – even if broadband, at just slightly less than six percent, is not yet a reality for most people. Brazil also has one of the most well developed online banking systems in the world.
In addition, the country occupies leading positions in terms of number of Internet users (63 million or 35% of the population) and there is ample space for further growth. The time they spend surfing the Web and on social media websites such as Orkut, MSN, and the recently discovered Facebook is phenomenal. At 48h 26min per month, Brazilians spend more time web surfing than their peers in the US (42h 19min) and the UK (36h 30min), based on July 2009 estimates.
Such high Internet usage and participation in social media impacts the way companies sell to and communicate with the market, as consumers compare products, share experiences with peers and, more importantly, participate in the creation of products and even management of companies. Innovative companies are keeping blogs and Twitter accounts to listen to their customers voice their opinions on store layouts, product development and even competing products.
Prediction: The development of certain retail segments such as hypermarkets and even the automobile industry may see radical changes, as consumption migrates from the physical to the online environment.
3. The potential of the "unbanked"
The banking industry saw an important chapter in 2009, when second tier Itaú acquired Brazil's third largest bank, Unibanco, to become the country's largest bank. It usurped the position of market leader, Bradesco, a position it had held for close to 50 years.
Both groups now plan on targeting the 49% of the population who are ‘unbanked', either through new branches to be opened in remote areas of the country, or through partnerships with popular retail chains, who typically sell on credit and are thus already playing the role of a bank. (The "unbanked" are those who do not have any bank accounts, and thus have no access to other financial services such as loans and insurances.)
Prediction: Consumer and retail segments in Brazil will benefit when banks increase their reach through retail stores. This is a trend already in place.
4. Greater credit card penetration
Brazilians have been more inclined to pay with cash, which is typically drawn from automated teller machines (ATMs) only once or twice a month. Credit in Brazil accounts for nearly 40% of gross domestic product, far behind the 70% average of other emerging countries. Over 50% of the population does not have a credit card.
Banks and retail chains are addressing this gap. Bradesco, in partnership with Banco do Brasil, will be launching a credit card in August 2010 that targets lower SES level consumers. Most retail stores offer their private label cards, especially to those people who have little or no access to bank credit.
Prediction: Consumption trends, especially those relying on online transactions, will change, as more and more people become accustomed to using credit.
5. Emphasis on being eco-friendly
Recent panels presented in the World Economic Forum in Davos showed that Brazilian consumers are more demanding than their European counterparts in their concerns about the environment and how products are manufactured or disposed of.
Companies that fail to respect at least the basic environmental rules in the region are at risk of being rejected by a good percentage of local customers. The trend can already be observed in some supermarkets which have started selling eco-friendly products, diminishing the use of plastic bags and providing recycling collection centers.
Prediction: Consumer and retail companies will begin to change their product formulas and possibly even eliminate some product packaging. Examples include the cardboard boxes that come with toothpaste tubes or any excess plastic packaging from a variety of products.
6. An aging population
Store sizes in Brazil have been shrinking, partly due to the aging population, as older shoppers prefer not to carry heavy shopping bags home. Catering to an aging population is not a fad. Life expectancy in Brazil increased from 69.5 years in 1998 to 72.7 years in 2008.
Prediction: Companies will need to develop tools and methodologies to understand this groups needs in order to tap this market successfully. This demographic change also calls for tailored and profitable products and services, such as the tourism industry, industrialized food companies and gym centers.
With the ground paved for rapid growth in the retail segment in Brazil, consumer and retail companies need to beware of sudden changes that can occur in emerging markets. The entrance of a new player, a merger or an acquisition for example, can change the competitive scenario quite drastically. Demographic and cultural changes can also have far reaching implications.
As competition becomes ever more intense, companies will need to become more concerned with segmenting, positioning and promoting their products and services accurately. All this can only be achieved by close listening to and monitoring the markets they are in.
About the Author
Global Intelligence Alliance (GIA) is a strategic market intelligence and advisory group. GIA was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory.
Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide.
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A Female friend from Brazil is hesitant about using her savings for a Nose job or a Mac Book Pro laptop?
I don't know what to tell her, could you please help me to help her what will be the best option to invest first?
ty.
mac book... ditch pro get air, shows u have style, no cd-drive though =(
Job Brazil
Brazil World Cup 2014 Stadiums
Helping The Poor In Brazil
*** INTRODUCTION ***
For many years, international property and land investors viewed Brazil as a country where inequality was a widespread problem - and therefore one to be avoided. In modern times, the contrary is becoming more apparent with a growing amount of evidence pointing to decreasing levels of those living under the poverty line.
This article discusses two of the notable social programmes that have been initiated with great success and visible results. In turn, lower inequality (amongst several other factors) has continued to push the country into the real estate investment spotlight - particularly as there are visible signs that incomes are increasing.
*** BOLSA FAMILIA ***
Launched in October 2003, the Bolsa Família ('Family Grant') was established under Luiz Inácio Lula da Silva Worker's Party government and provides financial assistance to poor families in Brazil as well as expanding support schemes started under the previous administration (led by Fernando Henrique Cardoso).
The grants are given to families on a monthly income of lower than 140 Brazilian reais based on the following conditions:
(i) That their children go to school (attendance levels are checked);
(ii) That their children get vaccinated;
(iii) The family makes use of designated health cards and other social services.
The basic grant is $BRL 68 per month, plus $BRL 22 per child under 16 years of age and $BRL 33 per adolescent. The aim of the programme is to fight long-term poverty via indirectly increasing the education and health of the population.
The creation of the Bolsa Família was the centre of Lula da Silva's election victory in 2006 and is currently serving over 12.4 million Brazilian families (with more enrolling on a daily basis). Whilst other comparable programs exist in Latin America (such as Mexico's 'Oportunidades' and other schemes in Colombia and Chile) this is the largest conditional cash transfer programme in the continent and the globe.
The programme has also partnered with several micro-credit projects in the North East to assist what is, evidentially, the poorest part of Brazil.
As with any initiative of this scale, teething problems have existed (mainly with regards to means testing) yet it is widely believe to be one of the main contributory factors leading to the reduction of poverty in Brazil. Since 2003, the number of people living on less than $1 a day has dropped by 21 percent - from 15.4 million to 11.3 million in 2008 (a figure that continues to drop). Evidence, published in 2009, has also pointed to the fact that over half a million Brazilian children and adults that received benefits through the Bolsa Família or registered in the country´s social programs database became literate in 2006 and 2007. At the same time, the number of people entering literacy programmes increased by 12 percentage points, 88 percent of which were in the country's North East region.
The Ministry of Social Development expects the program to reach 12.9 million families in 2010 as well as get 200,000+ people into jobs in construction and tourism. According to Camile Mesquita, director for the management of income transfer programmes at the Ministry of Social Development and Fight against Hunger: "the Bolsa Família is, for many people, the first security they have had."
*** FOME ZERO ***
Essentially working in conjunction with the Bolsa Família, the Fome Zero (Zero Hunger) program was established in 2003 to offer assistance to the low-income population and has thus far reached over 44 million Brazilians through cash transfers, food banks, community kitchens and markets and school meals.
Through its Social Mobilization Agenda, Zero Hunger coordinates the efforts of the Education Network for Citizenship (Programa Educação para a Cidadania) and the Committee of Entities Against Hunger and For Life (Rede Nacional de Mobilização Social or COEP).
The principle guideline for the strategy, that an adequate diet is a basic human right, was reinforced by the Food Security Charter (Carta de Segurança Alimentar) approved in 2006 (where a nationwide system was created in which local organisations, national authorities and civil society work collectively on actions against hunger with established mechanisms to monitor the state of nutrition in the country).
Despite a series of initial setbacks, Rosana Heringer, executive coordinator Action Aid, the international anti-poverty agency said in 2009: "No other developing country in recent years has made as much progress in reducing hunger as Brazil". The UN Food and Agriculture Organization (FAO) estimates malnutrition has been reduced by 73 percent in the last six years. National infant mortality levels have also fallen from 39 (in 1996) to 22 deaths per 1,000 live births in 2009.
About the Author
We provide FREE e-books, news, facts, figures, area guides, hints and tips for anyone with an interest in real estate and land investment in Brazil: http://www.brazilinvestmentguide.com/
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