Brazilian Retail News 401, August 22nd

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Brazilian Retail News Year 11 - Issue # 401 - São Paulo, August, 22nd, 2011

Phone: (5511) 3405-6666

Brazilian retail news 122/08/2011

Inditex-owned fast fashion chain Zara is

currently under investigation by Brazil’s Ministry

of Labour after one of its suppliers was accused

of slave labour. Four São Paulo sweatshops were

raided in late June, with all garments discovered

in the investigation labelled with the Zara brand.

The workers in the shops were from Bolivia and

Peru. Inditex said in a statement sent that the case

involved “unauthorised outsourcing” by a Brazilian

supplier for the company. Inditex did not provide

the name of the supplier. “The supplier was entirely responsible for the nancial compensation of the

workers, as established in Brazilian law and Inditex’s code of conduct,” the company statement said.

US Costco prepares to open stores in Brazil

US warehouse club chain Costco is in talks with one of the main supermarket chains in the Southernregion of Brazil to form a JV to run its stores in the country, according to Relatório Reservado report.

Online retail sales rise 24% in H1

Brazilian online retail sales continue growing far above overall retail. According to e-bit consulting,

sales rose 24% in the rst half of the year over the same period in 2010, to R$ 8.4 billion (US$ 5.25

billion), driven by the entry of lower-income people in the online world. E-bit forecasts online retail

sales will end the year in the R$ 18.7 billion (US$ 11.68 billion) range, 26% more than in 2010.

Zara Brazilian supplier accused of slave labour

Carrefour CEO says Brazil unit not for sale

Carrefour is not looking to sell its Brazil unit,

Chief Executive Lars Olofsson told last week

during a visit to the country, adding that he remains

open to possible partnerships in Latin America’s

largest economy. Wal-Mart has hired UBS as

an adviser as it weighs a potential purchase of

Carrefour’s Brazil assets, a source familiar with

the situation told Reuters, but Oloffson said he

was not negotiating with Wal-Mart and not selling

the Brazil unit. Still, Olofsson said he remained

opened to possible partnerships in the Brazilian market, which has become key for prots as growth

stagnates in the supermarket’s traditional markets such as France and Spain.




Phone: (5511) 3405-6666


Umbria speeds up expansion of Domino’s

Pizza in Brazil

Six years after assuming the management

of Domino’s pizza chain in Brazil, Umbria group

says it is time to expand the restaurant chain. Still

concentrated in Rio de Janeiro, Domino’s runs 35

stores and plans to open ten more until December,

increasing the store count by 50% this year. The

goal is to build a 100 store chain by 2014, all over

the country.

Sam Zell mulls purchase of top online retailer

US investor Sam Zell, well known in Brazil for

his real estate ventures, plans to diversify his

businesses in the country. Relatório reservado

report says that, aiming to take advantage of

the increasing spending of the local population,Zell plans to purchase stocks of online retailers.

The main acquisition target would be Submarino.

com.br, part of B2W, the country’s top online

player.

Northeast to drive c-store market sales

Northeast and Midwest are the two Brazilian

regions with stronger potential to the expansion

of convenience stores in the country, according to

trade group Sindicom, who expects this market to

rise by 15% per year in the next two years, above

overall retail sales. Today, there are 6,153 c-stores in

gas stations in Brazil, or 16% of the Market, a much

smaller share than in the US (89%) or even Latin

American countries, as Argentina (49%), Venezuela

(38%) and Chile (34%).




Phone: (5511) 3405-6666


The Neoconsumer shows up

Marcos Gouvêa de Souza ([email protected]), CEO, GS&MD – Gouvêa de Souza

Momentum

Neoconsumer, the multichannel, digital and global consumer, has seen his relevance growsin all retail segments and formats, not only in the online world, but, mainly, due to the changesimposed to other distribution channels.

The new behavior learned and incorporated from his experiences in the digital world (internetand mobile) defines new expectations and atitudes that are translated into more and better Information on products and brands; in the more critical comparison on what’s offered; and

in a significant increase in the importance of referrals from other consumers about their ownexperiences with products, brands, websites and stores.

These elements help reshaping retail in almost all product categories, worldwide and speciallyin Brazil.

The new edition of the global survey on the Neoconsumer, that interviewed 10,500 peoplein 15 countries, done by GS&MD – Gouvêa de Souza with support of Ebeltoft Group and tobe presented this week in DIGITAILING – the International Digital Retailing Forum, shows thechanges in consumer behavior made possible by the use of internet to search for products andcompare prices. In 2009, 49% of the interviewed people in Brazil said they used to shop onlineand purchase in the brick-and-mortar store, a f igure that jumped to 84% this year, pointing to a

new Neoconsumer shopping behavior.

It is important to remind there are in Brazil 72 million internet users and that the e-bit’s WebShoppers survey, released last week, the use of the web to shop goods and compare pricesis the second largest use of the internet, with 81% of mentions, after accessing emails (95%).

The same Web Shoppers survey say e-commerce sales rose 24% in the first half of the year if compared to the same period in 2010. FY forecast is for a 29% growth, to R$ 18.7 billion(US$ 11.69 billion). Considering overall retail sales are expected to grow by 7% this year, in thecountry the expressive growth of the share of digital sales over total retail sales, a worldwidemove, has been also happening.

As important, or even more, than the growth of online retail sales are the consumer behavior changes and the impact on new demands. In the Neoconsumer study, another relevant aspectwas the evolution of the share of people declaring they used price comparison sites in Brazil;from 73% to 81% in the last two years. The global macroeconomic effect of this price comparisonattitude presents a growing and irreversible pressure on retail profitability, also leading to pressureon suppliers, as consumers, more informed and critical, will tend to purchase where prices arelower, impacting margins.

Brazilian Retail News (BRN) is a weekly newsletter published by GS&MD - Gouvêa 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 [email protected] or access GS&MD - Gouvêa de Souza at www.gsmd.com.br.

Gouvêa de Souza & MD Desenvolvimento Empresarial Ltda.

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

Brazilian Retail News 401, August 22nd

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