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Brazilian Retail News

Year 09 - Issue # 370 - São Paulo, January, 17h, 2010

Phone: (5511) 3405-6666

Brazilian retail sales up 9.9% in November

According to the official statistics agency IBGE, Brazilian retail sales went up 9.9% in November year-on-year and
1.1% month-on-month. The growth was considered a surprise, as sales were strong in the last quarter of 2009. Sales
were up in all segments, but specially in the durable goods categories: car sales soared 30.4% year-on-year, furniture/
electronics rose 20.5%, computing/telephony jumped 20.4% and DIY, 15.8%.

Complains on online stores skyrocket in the

Xmas season

In December, Reclame Aqui (“Complain Here”) website

registered 320% more claims on the country’s 14 largest
e-commerce retailers over the same period in 2009, to a total
of 13,186. Three quarters of these were due to late delivery
and only one quarter to wrong products, damages, poor
service and others. Reclame Aqui said the strong increase
in complains came from infrastructure problems and to the
40% rise in online retail sales this Holiday season.

Consumer demand for credit rises 16.4% on year

A Serasa Experian survey reported the number of people looking for credit rose 16.4% last year over 2009, the best
ever, much above the 6.4% growth in 2008 and the 1.2% drop in 2009. In December, the demand for credit rose 19.7%
year-on-year. The growth was leveraged by the positive conditions of personal credit, rising consumer confidence and
low unemployment rates.

Burger King to double size in Brazil until


Fast food chain Burger King opened its 100th store in

Brazil in the end of the year and intends to speed up its
expansion, aiming to double its size in the country until late

Brazilian Retail News 1 01/17/2010

Brazilian Retail News
Year 09 - Issue # 370 - São Paulo, January, 17h, 2010
Phone: (5511) 3405-6666

Relearning to fly in the US retail market
Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza

In the 100th National Retail Federation’s Big Show, each year more international, some perceptions make clear the
segment lives a new reality. In spite of the unemployment rate in 9.4% range, one of the highest in the country’s history, one can
already notice in the retail sales the consumer mood has been improving, pointing to a new growth cycle in 2011.

Definite figures are still to be released, but in 2010 retail sales growth must be in the 6% range, bouncing back from the
2009 6% loss. But this recovery doesn’t happen evenly among sectors, channels and store formats.

The best performance was in the non-store retailing, with an 11% growth, much above average and continuing to increase
its share in the overall retail sales. Last Christmas, due to the snow storms in the East Coast, the channel was even more sought.
It’s important to remind that from 1992 to 2010 this segment’s sales rose almost twice as fast as the overall US retail.

The second fastest-growing sales channel has been the value-driven mass merchants, as the supercenters and warehouse
clubs, that shall end 2010 with a 4.6% growth. This segment has also been leveraged by the recent crisis, as many consumers
were converted to this value proposition. A behavior that shall last for the next years, with a consistent above average growth.

The building supplies segment, after lousy performances in 2008 and 2009, has shown a slight recovery and shall end
2010 rising 3.2%, while furniture/electronics shall increase sales by 0.6%. These two segments were the most affected by the
burst of the real estate bubble and only now have started showing signs of life again.

Two sectors have been confirming their DNA.

On the positive side, Health and Beauty, with 3.7% expansion, has reaffirmed its vocation for growth, in crisis or expansion
times. It is one of the segments who have presented a more consistent positive behavior in the last 18 years, pointing that under
any scenario consumers demand these goods, or as a prize to themselves, or as a compensation.

On the negative side, department stores shall end 2010 with a 2.2% sales drop, in one more step in a 20-years long
bitter cycle of market share loss. Although some companies, as Dillards, Nordstrom, Macy’s and Bloomingdale’s, have had a
good Holiday season in 2010, their performances along the year have not been enough to revert a clear trend of market loss
and inability to reinvent the business model.

The mood of the US economy, in general, and retail, particularly, has definitely changed, with this perspective of recovery
and a more positive look ahead, that may mean for 2011 a new expansion cycle, with a 4% to 5% growth.

The market is “relearning to fly” with new wings and the cautiousness on investments in products and on the margins
have been the top concern. Generally speaking, the market is much more cautious on building inventory, so it can avoid huge
off-price, low margin sales. Maybe it is here the most relevant structural change in the US market, historically less concerned on
inventory level and turn, that, due to the global crisis, has become more aware of the importance of better managing this asset
to be less aggressive in promotions and discounts.

The huge number of attendees at the NRF Big Show, specially when compared to last year, already points to this change
of mood, reflecting the general state of the US market. Good for them, good for the world and for Brazil.

Gouvêa de Souza & MD Desenvolvimento Empresarial Ltda.

Av. Paulista, 171 - 10º floor
Paraíso – São Paulo – Brazil – Zip Code: 01311-904
Phone: (5511) 3405-6666 – Fax: (5511) 3263-0066

Brazilian Retail News 2 01/17/2010