The remains “a lot of potential” in Brazil if retailers are willing to invest, according to the country’s largest retailer, CBD.
Speaking at the World Retail Congress in Paris yesterday (7 October), Edson Kawabata, strategy and development director for CBD, said there is “a lot of opportunity for growth in Brazil… reflected by incoming players to Brazil in the last few years”.
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CBD, also known by its trading name of Grupo Pao de Acucar, faces competitors in the food retail space like Wal-Mart Stores and Chile-based Cencosud.
However, Kawabata suggested “differentiation” is key to competing effectively with international rivals.
“Retailers need to accomplish higher levels of loyalty with customers. Also, multi-channel is key. From research on click-and-collect, this [channel] is increasing all the time in Brazil. There is more of a move to e-commerce.”
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Marcos Gouvea de Souza, director general of retail consultants GS&MD, said the growth of the channel had been strong. “In 2013, the [value] forecast is set to reach US$14bn and from 2013 will have a compound increase of 30% per year.”
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By GlobalDataSouza noted the recent economic slowdown in Brazil after a decade or more of growth had boosted consumption and attracted investment.
“In the last few years there was a huge increase in credit. At the same time payroll increased and unemployment has continued to decrease.”
However, he added: “Particularly in the last year until now, consumer confidence has changed.”
Brazil’s economy has cooled in recent years, forcing the consumer goods sector to have to adapt to a more cautious consumer. According to World Bank data, between 2003 and 2011 Brazil’s GDP rose at an average of 3.9% a year. Consumer goods companies doing business in Brazil rode a wave of a country with a growing emerging middle class.
However, in 2012, growth inched up 0.9% as the slowdown in China and consequent fall in its demand for commodities hit Brazil. Household debt also hit consumption. Growth in Brazil this year has so far been better than the anaemic performance in 2012 but forecasts for 2013 have still been lowered as the year has progressed.
Nonetheless, the latest data from IGD suggests Brazil is not a market to be ignored.
Figures show the Brazilian grocery market is currently worth $329bn and is set to become the fourth largest in the world by 2016, valued at $468bn. With its large population and growing middle class, Brazil is an enticing market for foreign and local investors.
Click here to read more in-depth analysis of the challenges and opportunities of operating and investing in Brazil.
