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Brazilian Retail News

Year 10 - Issue # 390 - So Paulo, June, 13


th
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 1
13/06/2011
Brazil is the worlds best market for retail investments
The most recent edition of the AT Kearneys Global Retail Development Index (GRDI) shows Brazil as the new leader
among the worlds most attractive countries for foreign investments in retailing. The study analyses 30 countries and 25
factors in four categories (economic and political risk, market attractiveness, market saturation and time pressure) and
shows Brazil combines a large urban population, economic and political stability and growing retail sales. China, leader
last year, fell to the 5th position.
Private label sales rise 21%
The sales of private label goods in Brazils supermarket chains rose 21% in 2010 year-on-year, above the 17% reported
by the leading market brands. The fgures are part of a Nielsen report to the private label association Abmapro. Even so,
private label goods account for only 4.8% of the supermarkets total sales.
Creidt card usage rises in Q1
According to the Brazilian Credit Card Companies
Association (Abecs), the Brazilian card market ended Q1
with total sales of R$ 145.2 billion (US$ 86.9 billion). Credit
cards accounted for R$ 83.7 billion (US$ 50 billion) , 23%
more than one year ago, leveraged by the tourists spendings
overseas.
Contours to open 150 ftness centers in fve years
With 105 units running in Brazil, Contours women-only ftness centers chain intends to open 150 more in the next fve
years in the country. Since 2004 in Brazil, the brand is present in 18 states.
Brazilian Retail News
Year 10 - Issue # 390 - So Paulo, June, 13
th
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 2
13/06/2011
Arezzo to open 39 stores this year
Womens footwear, bags and accessories chain Arezzo,
today with 280 stores in Brazil, as well as a presence in
many foreign markets, as Portugal, Bolivia, Paraguay and
Venezuela, opened last year 33 stores. The improvements
of the Brazilian economy have led the company to forecast
the opening of 38 units this year, 29 of them franchised.
Brazil Pharma plans to raise up to US$ 328 million in IPO
Brazil Pharma, the pharmacy unit of Banco BTG Pactual, plans to raise up to R$ 519.8 million (US$ 328 million) in an
initial public offering (IPO). Brazil Pharma plans to sell as many as 27 million shares, including possible supplementary
offerings. The stock may be priced at R$ 16.25 to R$ 19.25. The stock is likely to be priced on June 22nd and will start
trading on June 27th.
Po de Acar makes traceability program mobile
Grupo Po de Acar, Brazils top retailer, has expanded its traceability program Qualidade Desde a Origem, developed
since 2008 to assure the quality of fruits and vegetables sold at the companys super and hypermarkets. Now, consumers
can, using their mobile phones, consult the entire supply chain of the goods sold by the company. One can search using
the product PLU code, or scan the packages QR-Code, and see in the mobile phone the product page, with information
and pictures, details and suppliers data. Monthly, Po de Acar moves around 28,000 tonnes of fruits and vegetables,
and until the end of the year 100% of them will be traced.
Laptop market rises 35%
From January to April, according to GfK, the laptop
market rose 35% over the same period in 2010, to 1.3 million
units sold. In the period, the average price dropped 16.3%.
Laptops accounted for 49% of all computer sales in Q1,
driven by equipments in the R$ 1.000 R$ 1.500 range,
who made for 46% of laptop sales.
Brazilian Retail News
Year 10 - Issue # 390 - So Paulo, June, 13
th
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 3
13/06/2011
Food Service: reality and forecasts part 2
Marcos Gouva de Souza - CEO, GS&MD - Gouva de Souza
Momentum
The increasing share of food service in the total food spending in the US, going again above the 50% mark, as in 2000, depends
on the US economy and spending recovery, with the consequent resume of the trend of increasing frequency to restaurants
(classifed as complete service operations CSO) or snack bars, bars and similar (known as limited service operations LSO).
But the mood of the US consumers has not yet recovered from the fnancial and economic impacts of the recent crisis and,
much on the contrary, the forecasts for 2011 say the scenario will get worse to 50% of the interviewed by Technomic in April,
much above the 29% of the December, 2010, survey. The ones saying scenario will be just as it is today are 28%, below 34%
in December. The ones saying the situation will improve are just 21%, way below the 36% of the end of last year.
Among the main consumer concerns are the fuel prices (53%), a dramatic factor for a highly motorized society; the rising
food prices (28%); and the personal fnances (28%).
As a consequence, the consumers behavior has been of change, as 48% said they have been choosing limited service
operations, instead of complete service alternatives. More relevant has been the group (55% of the sample) who has been
choosing to go to the same kind of restaurant than before, but choosing cheaper items on the menu.
The fuel price issue has a strong impact on the food spending behavior, and directly affects the food service segment. In
the same Technomic research, 70% of the consumers said that, due to price rises, they would go less to restaurants, while
only 40% would shop less in supermarkets.
Due to the size and maturement of the Food Service segment in the US, the constant measurement of the consumer behavior
and his way to react to the economic scenario has become a pivotal point to evaluate the future behavior of all the segment,
but also specifcally the demand for specifc items and the preference for some brands or formats.
An example is that, for a nominal 0.5% growth in 2010 of the entire Food Service market, the limited service operations rose
1.9%, while the complete service operations had an 1.3% fall, in a clear sign of the consumer behavior changes. The forecasts
for 2011 point to, respectively, 3.5% and 1.5% growth, and, when adding the forecasts for bars and other beverage operations,
lead to a 2.6% average growth for this year.
But it is interesting to notice some brands and formats that could better understand the changes or adjusted their business
models, even reshaping their businesses, have been performing way above the countrys average. This is the case of Five
Guys chain, that, with around 750 stores and total sales of US$ 625 million, improved its sales by 38% in 2010. Or of Chipotle,
inspired in the Mexican food, whose sales rose 21% last year and went close to US$ 1.9 billion in its 1,084 stores. As happens
in many segments, there will always be come who, based on their unique strategy and management, will perform much better
than the average.
Todays stage of the Food Service market in the US is a fnished sign of the future of the same segment in Brazil, as new
investments have been made by more formal and structured companies who have been maturing in a consistent way. It is only
a matter of time.
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 our
services, 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 foor
Paraso So Paulo Brazil Zip Code: 01311-904
Phone: (5511) 3405-6666 Fax: (5511) 3263-0066