[credit provider=”Tinou Bao via Flickr” url=”http://www.flickr.com/photos/tinou/413398915/”]
Brazil may be a land of huge opportunity for luxury retailers, but any company looking to enter the Brazilian market should tread with care.”Brazil is very expensive, very bureaucratic, and there are not a lot of retail opportunities,” said –
Carlos Ferreirinha, head of Brazil-based luxury brands marketing agency MCF Consultoria e Conhecimento. “The market demands a lot of interpretation and planning.”
Even so, for companies willing to make the effort, the payoff can be huge.
The country’s luxury market was growing at a rate of around 17% a year prior to the 2008 financial crisis, and after a slight dip during the recession, growth in 2010 was over 22%, said Ferreirinha, who previously managed Latin American markets for Louis Vuitton.
Brazilians are unique when it comes to luxury consumption; unlike other emerging markets, the nation has an impressive number of domestic luxury brands, like Brastemp and Daslu.
But consumers who can afford luxury goods — a number that’s rising quickly throughout the country — still prefer classic European brands, Ferreirinha said.
And Brazil is uniquely situated for growth compared to its Latin American counterparts.
“Brazil is the only country in Latin America that has show that it will be able to have larger distribution in multiple cities,” Ferreirinha said, explaining that while 90 per cent of international luxury brands are currently based in Sao Paulo, momentum was building for such brands in both Rio de Janeiro and the capital city of Brasilia.
While European brands like Gucci and Chanel have the advantage of name recognition among Brazilian consumers, American brands are also becoming increasingly popular, Ferreirinha said. Ralph Lauren is a favourite among shoppers, Calvin Klein was recently reintroduced to the market, and Coach has also recently started operations in Brazil, he said.
One challenge luxury brands should keep in mind: while most luxury markets around the globe cater to a mix locals and foreigners, consumers in Brazil are likely to be strictly Brazilian.
Explained Ferreirinha, “It’s because Brazil is so expensive, no tourists would ever go there to shop.”