Brazilian Retail News 400, August 16th

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Brazilian Retail News Year 11 - Issue # 400 - São Paulo, August, 15th, 2011

Phone: (5511) 3405-6666

BRAZILIAN RETAIL NEWS 115/08/2011

Australian Billabong, one of the world’s topsurfwear brands, opened at Iguatemi Alphaville

mall, in the Greater São Paulo area, the rst

100% RFID store in Latin America. The chip-

embedded goods are connected to the store’s TVs

and iPads, providing consumers entertainment

and interactivity, as they will be able to access

information on products in the dressing rooms,

mirrors and in the checkout. The technology also

eases the logistics processes, as goods can be

tracked from the inventory to the checkout.

Brazilian retail sales go up 7.1% in June

In June, Brazilian retail sales went up 7.1% year-on-year, so said ofcial statistics agency IBGE.

The result was above the 6.3% reported in May and led year-to-date sales to a 7.3% rise. Durable

goods drove sales up, even over a strong comparison base, as in June last year the FIFA World Cupboosted the market.

GGP bets on Brazil to grow

The global crisis does not worry General Growth

Properties (GGP), one of the US top shopping

center groups and co-owner of Aliansce, Brazil’s

third-largest mall group. Aliansce plans to invest

R$ 632.2 million (US$ 395.12 million) until the end

of 2013 to build four malls and expand another six.Today, the company runs 15 private-owned malls

and manages another eight. Aliansce says it will

continue growing based on greeneld projects.

Billabong opens first 100% RFID shop in Latin America

Westfield shopping center group enters Brazil through JV

Australian group Westeld, one of the world’s

largest shopping center players, has partnered

with Brazilian group Almeida Junior, owner of

four shopping centers in the Southern region, to

create a joint-venture of which each company

owns 50%. The company will develop large and

midsize malls all over the country and marks

the rst time Westeld invests in a non-English

speaking nation.




Phone: (5511) 3405-6666


Foreign franchises double pace of entry in

Brazil

The good performance of the Brazilian economy

and the crisis in the developed markets made the

country a top priority for the expansion of foreign

franchising groups. The annual pace of entry of

foreign franchisors in the country more than double

in the last three years, compared to the 2000-2007

period, from four companies to nine, according

to data provided by the national franchising

association ABF.shops in 21 states.

BFFC increases sales by 20% in Q2

Brazil Fast Food Corporation (BFFC), owner

of Bob’s fast food chain and Brazil’s number two

company in the segment, said in Q2 its sales

rose 19.8% year-on-year, to R$ 207.9 million

(US$ 129.94 million), while operating profits rose

7.6%, to R$ 51 million (US$ 31.87 million). Thecompany’s net profits reached R$ 3.3 million (US$

2.06 million), 11 times more than one year ago.

BFFC ended the quarter with 805 stores under

Bob’s, KFC, Pizza Hut and Doggis brands in Brazil.

Magazine Luiza sales soar in H1

Walmart creates Sustainable Goods category in its online shop

Magazine Luiza, one of the country’s top electronics

chains, said in H1 its sales soared 44.5% year-on-

year, to R$ 3.44 billion (US$ 2.15 billion). Same-storesales went up 19.7% and in the Northeast total sales

skyrocketed 80.6%, due to the acquisition of Lojas

Maia chain. In Q2, company’s sales jumped 38.2%,

to R$ 1.74 billion (US$ 1.09 billion).

Walmart expanded its online store with the opening of the Sustainable Goods category, offering

more than 700 green products. Sales of this category are expected to double this year, due to a special

presentation that informs consumers on the environmental benefits of each item. The category will

present six major branches: organic and natural cosmetics, energy, e-solidary, raw materials, alternate

transportation and waste management.




Phone: (5511) 3405-6666


New formats to new realities

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

Momentum

Now it is time to Riachuelo announce a new generation of store formats, more compact and women-only. It follows other

chains, as Marisa, with its underwear shops, and Renner, with more compact and jeanswear shops under private-owned brand

Blue Steel, still an trial.

The development of new retail store formats, fit to new reailites, is a permanent process in the global scenario and is a

response to the need to adapt or reinvent concepts according to the various changes continuously going on in the economic

and business environment.

The new formats shall create solutions for the problem of saturation in many markets, as in São Paulo and Rio de Janeiro.They must aim new segments that have increased their purchasing power, as happened to the midclass in Brazil. They shall

face the challenge of serving customers that demand much more convenience, as happens worldwide; and shall also face the

competition with new channels, as e-commerce and m-commerce, that brings in new behaviors to customers, making easier

the access and product and price comparison in the digital world.

In Brazil, the development of new formats to serve these different motivations is still in the beginning, due to the various growth

opportunities still existing to the traditional formats in a period of market expansion. It is necessary, however, to be ready to

understand these needs and to think in new alternatives to take advantage of this special moment of the economy, regardless

foreign crisis, to expand market cover. Multiplying channels, formats, businesses, fascias and brands.

And one needs to understand that Brazil is more and more facing different regional contexts, that must be understood and

served in different ways, supported by a single platform. The new emerging shopping classes have their own view on whatthey want and, although they could only dream of using some products or brands, they can feel better if they have it all in an

environment that fits their values and ambitions. The digital, multichannel and global Neoconsumers expect much more of

their stores and brands. Their level of information, knowledge of goods and reference of brands is far above the non-digital

consumers. For them, the traditional store format, specially the large surface ones, is inconvenient and old. Women, full of new

challenges, facing multiple activities, more informed and empowered, want more convenience, easiness, services, updating

and relationship.

No matter how one looks at the market, it must be faced as a prism in which, depending on the light, we can identify a range

of colors, creating new views. This is part of the new reality of the market and has been changing fast, reason why the rethink of

new store formats must have as one of its most basic premises the flexibility to allow for the possible adaptation to the consumer’s

mutant behavior. And it must be present when choosing the place, design, equipment and, mainly, people in the stores.For the players that think in new store formats, the biggest mistake is to go to the simple thought of adapting the existing

reality, looking to serve emerging demands. Rethinking store formats supposes a broad view and is a special opportunity to

rethink its own infrastructure from the solutions found to serve a new market or segment.

As for retailers as for the industry, to rethink store formats is usually a strategic mark in the history of the company, as stresses

the customer-centric view, as companies were still fundamentally oriented to product, brand and product. Ralph Lauren, Nike,

Apple, Adidas, Nespresso and Samsung are global examples, as Hering, Todeschini, Via Uno, Arezzo and Lupo in the domestic

market.

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 floor Paraíso – São Paulo – Brazil – Zip Code: 01311-904Phone: (5511) 3405-6666 – Fax: (5511) 3263-0066

Documents

Brazilian Retail News 400, August 16th