The economy is booming, but people still have very “short term minds.” If you try to get your idea about Brazil, you have to confront with several opposite opinions.
Brazil’s luxury market is five times smaller than China’s ($7.59 billion annually in luxury goods revenues), only 1% of the global market, the accounting rate growths of 22% a year, far outpacing several more established markets and even its own general retail sales, which rose an estimated 11% in 2010. Fashion powerhouses like Tiffany’s and Gucci count Brazil among their top performing markets worldwide, and the country’s booming economy, although it may be slowing down in coming years, will remain promising enough to continue fuelling domestic demand and attracting international brands. The growing is expected to drive luxury goods sales in the next decade, with Brazil likely to represent 6% of the global market — or $63.5 billion — by 2025, according to a report by investment bank Goldman Sachs.
With a population of 190 million people – the fifth most populous country on the planet – for years, Brazil received little attention from the international luxury goods industry, which was content to serve the market through other channels, primarily via licensing and franchises.
For years, Brazilians also simply bought luxury goods from their friends, who imported luxury products in their suitcases from their trips abroad. This is one of the reason because the São Paulo-based luxury emporium Daslu has been founded.
Despite the sense of optimism and the glossy surface is a complex market with a complicated future.
When you actually try and do business here, you will eventually find yourself stuck in a morass of government bureaucracy, corruption and an incomprehensible system of taxation.
Not only does this make Brazil extremely difficult for global luxury brands to manage, it also makes imported products as much as two or three times more expensive than in their home markets.
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The number of millionaires in Brazil is on the rise, spurred by a commodities boom and new oil discoveries, and is predicted to surpass 1 million by 2020. Property prices in Rio De Janiero are sky-rocketing. Meanwhile, this year, the Brazilian luxury goods industry is expected to grow to more than $12 billion. In comparison, there is also a thriving home-grown apparel and textiles industry, valued at more than $60 billion, with only $1.5 billion going to exports.
Who exactly are these Brazilian luxury consumers? why are they willing to pay such outrageous prices?
Brazilians do shop abroad, particularly in Miami or New York, but contrary to popular opinion as gregarious people, they “tend to be shy and prefer to buy at home because they are more comfortable here, where they can speak in Portuguese” said Graça Cabral, a director of Luminosidade. Customer service is also a magnet for shopping. In Brazil, clients have close relationships with their favourite sales people, who constantly feed them information.
Ms. Mendes, founder of the country’s leading lifestyle public relations firm, with no irony added: “The Brazilian people are very creative with money.”You see, in Brazil you can buy everything by payment plan, even luxury goods from Chanel and Hermès. You can pay for your tweed suit in four payments or pay for your luxury handbag in seven installments, and so on. Depending on the kinds of stores you’re visiting, and how much you’re spending, you can split your payments into smaller and smaller chunks.
More than one expert suggested that these payment plans are also a convenient way for women to disguise their luxury purchases from their husbands, splitting up payments across credit cards, cheques and cash.
