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Brazilian Retail News

Year 10 - Issue # 393 - So Paulo, June, 27


h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 1
27/06/2011
Clinique launches e-commerce in Brazil
Clinique has chosen Brazil to be the frst country with an e-commerce operation in Latin America. In the website
consumers can purchase from the entire portfolio of the company and also access corporate information, videos and
beauty tips.
Consumer confdence rises in June
The confdence of So Paulo metropolitan area consumers rose in June, according to the ICC ndex calculated by retail
trade group Fecomercio-SP. The 0.5% rise, to 154.6 points, followed three consecutive drops of the measure and was
driven by good employment and income levels. Confdence rose faster for consumers with income below ten minimum
wages: 1.22%, to 153.4 points.
Carrefour says will not sell stores in Brazil
French retailer Carrefour said it intends to maintain the control of its Brazilian branch, considered pivotal for its long-
term global growth strategy. In the annual shareholders meeting, in Paris, a member of the board said the company will
not give up a majority share in its Brazilian division. CEO Lars Olofsson said the companys strategy is to be leader in
countries as Brazil, China and Indonesia, and that is looking for growth opportunities in emerging markets.
Sears returns to Brazil
US department store chain Sears plans to return to Brazil,
where it had stores in the 80s. The plan is to open stores
under franchising, coordinated by Global Franchise, who
intends to build 500 to 900 sq.m. shops. The pilot store, in
So Paulo, shall be opened in the second half of the year
and the goal is to open 300 stores in the next years.
Brazilian Retail News
Year 10 - Issue # 393 - So Paulo, June, 27
h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 2
27/06/2011
US Quiznos to open 200 stores in the
country
US sandwich chain Quiznos reached a master franchising
deal with local group Brazil Best Food to open 200 stores in
the North, Northwest and Midwest regions in the next years.
The company will open seven stores until the end of this year.
Elektra struggles to be relevant in Brazil
After the purchase of Lojas do Ba by Magazine Luiza, increasing the consolidation in the Brazilian electronics market,
Mexican Elektra has been even more under pressure. Elektras owner Ricardo Salinas is expected to speed up organic
expansion, as the chain has an almost irrelevant presence in Brazil, with 28 stores around Recife city, in the Northeast.
With Ponto Frio / Casas Bahia and Mquina de Vendas increasing investments in the Northeast, Elektra becomes even
more pressed. Salinas plans now to build a 100-store chain until the end of 2012, investing R$ 200 million (US$ 125
million) in a move will make the company expand in the Northeast and Southeast regions.
Online retail sales up 15% on Valentines Day
Figures reported by e-bit show online retail sales on Valentines Day (June, 12th) reached R$ 680 million (US$ 425
million) this year, 15% more than in 2010. Although very positive, performance was the weakest this year among the
seasonal dates: on Mothers Day, for instance, sales rose 22%, and FY sales are expected to grow by 30%, below the
40% reported in 2010. On the other hand, comparison basis has been strong, as last year the soccer World Cup helped
fgures to go up.
Brazilian Retail News
Year 10 - Issue # 393 - So Paulo, June, 27
h
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 3
27/06/2011
A new retail for a new Brazil
Marcos Gouva de Souza - CEO, GS&MD - Gouva de Souza
Momentum
From 2000 to 2010, half of the 50 fastest income growth cities with population above 100,000 are in the Northeast. In the
North, Northeast and Midwest are most cities whose per capita income expansion were above 20% in the same period. These
data point to a new geography of spending in Brazil, demanding from the companies a review of their business expansion and
market cover strategies.
In a short period of time, markets considered as peripherical became the focus point, due to the spending potential gained
in the recent evolution of the Brazilian economy, driven by the rise of employment and per capita income and motivated by the
expansion of consumer credit.
As a consequence, consumer goods companies have been looking for ways to speed up the expansion of their activities and
increase the presence in these markets. But, generally speaking, they have been focusing on their traditional expansion models,
dependant on their own resources, what limits the odds to better take advantage of the market opportunities and is barred by
the boundaries of a scenario to which, due to a strong economic growth, its been already hard to fnd all the resources needed.
Some companies have already noticed more open strategic models, in the way of corporate alliances that include franchises,
licensing and business groups, may make this expansion feasible in a consistent way, allowing for a faster and still controlled
expansion, specially in a moment when the lack of qualifed workforce, that would make feasible this faster growth, becomes
broader. And globally, Nike perhaps is a typical case, with its several store formats and different business models.
In Brazil, one of the best examples is car services group DPaschoal, who mixes expansion by private-owned stores with
the integration of independent players, in an exclusive and highly successful model, transforming individual entrepreneurs
in business partners and helping DPaschoal to more than double its chain, operating in smaller markets where a traditional,
private-owned store would not ft.
The same way as DIY chain Dicico has been doing, launching a franchising program to attract independent players to join
the chain, differentiating from the local competition in products, communications and services.
Wholesalers have also been tracking this path and Martins-owned Smart chain has been one of the best cases of development
of a different relationship with independent players, specially in these new regions.
Some industries, in many segments, have also seen the opportunity to increase their market presence in these new markets
through franchising. Among them are Heing, PUC, Marisol, Via Uno, Todeschini, Dell Anno, SCA and many others, stimulating
newcomers as Bosch and Bibi Calados. And, as always happens when the industry makes the frst move, it not only tries to
speed up expansion in new and traditional markets, but also looks for doing it in an unusual way, adding value to the products
and the brand, situation not always possible with the conventional distribution channels.
Overseas, specially in Europe, this process has grown remarkably. Pressed by laws that protect independent players, large
corporations started using franchises and business alliances to keep their expansion plans, integrating independent players
to the franchised chains. The most remarkable example is Carrefour, with its small-size store formats in France, Spain, Italy,
Belgium and other countries, in markets where a private-owned store would not be feasible, but this way making sure the brand
is present and the purchasing power becomes larger.
In Russia this also happens with X5 chain, mixing private-owned and franchised stores, the same way as in China and in
this case, different from mature European markets, were talking about exploring opportunities to speed up growth in emerging
countries.
However, when dealing on expansion strategies mixing private-owned and third-party operations, one must always be alert
to the fact this option requires distinct management and structure models. The temptation of keeping both under the same
structure usually leads to failure, as these are concepts with very distinctive cultures, mindsets and attitudes.
In the new Brazilian spending geography, besides speeding up the use of multichannels, the possibility to mix private-owned
operations with others, through business alliances, should be much more considered and studied by the large corporations,
so one would not lose the chance to better take advantage of this new reality.
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