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Luxury Goods in Emerging Markets 2013 - Competitive Analysis


Brazil 2013 luxury market intelligence report

Brazil 2013 luxury market intelligence report

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Brazil 2013 luxury market intelligence report

  1. 1. Brazil 2013 - Luxury Market Intelligence ReportValor LuxuryLab 1
  2. 2. 22013 Brazilian Market Overview2013 Brazilian Market OverviewAccording to the FMI’s expectation, Brazil willbecome the fifth largest economy in the worldd•3rd largest footwear producer•3rd largest cosmetics market•7th largest consumer market•5th largest apparel industrial structureSigns of prosperity
  3. 3. 3Largest Seller of Ferraris in São Paulo Largest fleet of helicoptersLargest Consumer of Yachts Largest fleet of private jets2013 Brazil Market Overview2013 Brazil Market OverviewSigns of prosperity
  4. 4. 4Brazil continues to be a second Priority Investment CountryMultinational companies continue to regard China as a top investmentpriority and Brazil a secondWhen asked which key markets they would invest in:56% replied China52% Brazil35% India34% US26% Mexico25% Turkey* Survey conducted by PricewaterhouseCoopers with227 chief executive officers from a cross-section of multinationalcompanies2013 Brazil Market Overview2013 Brazil Market OverviewSigns of prosperity
  5. 5. 52013 Brazil Market Overview2013 Brazil Market OverviewLuxury Consumer’s ClubThe penetration of luxury products and services in Brazil is oriented towards a 10%of the population, this is in line with estimates by FGV, a Brazilian research institute,which sized the A/B population at 20 million in 2010, with total income of $ 817billion(36% of country total).Billionaire’s ClubSão Paulo has 21 billionaires with US$ 85 billionsRio de Janeiro 3Source: Forbes MagMillionaire’s Club4,618 millionaires with total assets of US$ 865 (1,880 individuals with net assets of$30 million or more)One person in Brazil will become a millionaire every 27 minutes in 201378% of millionaires live in São Paulo and Rio de JaneiroThe number of millionaires in Brazil is on the rise, spurred by a commodities boomand new oil discoveries, and is predicted to surpass 11,000 by 2020Source: Wealth Report 2013 published by Wealth-X
  6. 6. 62014 Soccer World Cup * The impact over final demand R$ 29,6 billion2016 Olympic Games* More than one million visitors are expected to travel to Rio and São Paulo for eacheventAccording to The Economist, in recent years… “Brazil has beentransformed from country of tomorrow to ’once-in-a-lifetimeopportunity.’”* Ernst & Young Terco – Passport to Brazil2013 Brazil Market Overview2013 Brazil Market OverviewBrazil’s pushing economy events
  7. 7. 72012 346 malls2013 Projected to open + 73• Retail Industry (Non Food) Us$ 110 Billion• Apparel & Textiles and Footwear Industry Us$ 60 Billion*(Doubled In 10 Years)Luxury malls & areas - São PauloLuxury malls & areas - São PauloCidade JardimCidade JardimJk IguatemiJk IguatemiShopping IguatemíShopping IguatemíOscar Freire áreaOscar Freire áreaOutlet PremiumOutlet PremiumGlobal Retail Development Index –Brasil is the best country in the world toinvest in retail industry20132013 BrazilBrazil MarketMarket RetailRetail OverviewOverview
  9. 9. Due to the global crisis, many international luxury brands are trying to escapefrom the European recession and are exploiting new areas by expanding theirbusinesses in the BRIC countries especially in Brazil, whose economy is amongthe most promising in the world.The most significant growth of the luxury market was due to the hugeinvestments in new shopping malls in São Paulo City. these investments focusedon luxury and high end markets like Shopping Cidade Jardim (2008), JK Iguatemi(2012) and the existing Iguatemi Mall.International luxury brands like Chanel, Gucci, Prada, Hermes, Bottega Veneta,Miu Miu, and Tory Burch entered the Brazilian market with direct investment.There have been another 90 new retail openings since 2008.-from 2009 to 2010 sales increased 28%-from 2010 to 2011 and increased 18%In short time, the luxury retail landscape is being completely redefinedAT LEAST TWO DECADES!
  10. 10. The Brazilian high-income market reached more than R$ 20 billion in sales in 2011, based onestimates by industry experts. Across the last five years, the market grew consistently atrates above 20% (in nominal terms), outpacing both the overall retail sector (13%)and therapidly growing shopping mall industry (17%).GS Economists estimate that the addressable market for luxury, defined as income aboveUS$30,000 per capita/annum, will reach 17% of the Brazilian population in 2025, up from 7%in 2011, implying 22 million new consumers. Assuming that average spend rises in line withinflation, this would suggest a more than five-fold increase, bringing the total market size toR$110 billion (2011-25E CAGR 13%).Classes A & B have an outsized share of purchasing power. According to the latest figuresof the Brazilian Economics and Statistics Office (IBGE 2008/09), classes A and B, defined asearning more than US$3,500 in monthly household income, represent less than 10% of thepopulation, but earn almost 40% of total income. The much-discussed emerging middleclass, meanwhile, accounts for more than half of the Brazilian population and 54% of totalincome. On IBGE’s numbers, the high-income group is comprised of 18 million people withtotal income of R$760bn (2008/09). Adjusted for growth, this is in line with estimates by FGV,a Brazilian research institute, which sized the A/B population at 20 million in 2010, with totalincome of R$817billion (36% of country total)Source: The Aspiration to Luxury in Brazil from Goldman Sachs Global Investment ResearchBRAZIL’S LUXURY MARKET OVERVIEW
  11. 11. Store Openings38 Flagship stores opened in São Paulo in the last two years127 International Brands Intl entered Brazil in the last tree yearsR$ 2 billion in investments for the opening of new stores in 2012BRAZIL’S LUXURY MARKET OVERVIEWSão Paulo is the leading city in Brazilian luxury consumption, accounting for 66%of the market. (São Paulo is the luxury capital of Latin America)Luxury brands yet do not extend their business beyond three main cities:São Paulo, Rio de Janeiro and Brasilia
  12. 12. Brazil is a complex market and requires expertiseThe Brazilian economy has actually been slowing down, however the views about thefuture therefore remain optimistic.Barriers to entryA staggering 35 % of Brazil’s GDP is comprised of taxes, higher than the United States(24,8%) and Argentina (29%). Lower them France (43,1%) and (36,0%) EnglandGovernment bureaucracy an complex system of taxation will require local expertiseHigh import tariffsLimited retail infrastructure as Brazil has very few high-end department/multibrandstores. The majority of high-end brands sell through mall-based mono-brand storesand e-commerce.BRAZIL’S COMPETITIVE DYNAMICS
  13. 13. Brazilians are very brand conscious, well informed and traveledThey are very familiar with international luxury brands and they care about quality andexclusivityThey are influenced by the European culture and style, and by the American Lifestyleand consumption standardsDespite the Brazilians love casual fashion style, they like to dress up.“Wealthy woman in Brazil is completely fashion oriented, follow American Vogue andthey know everything about fashion.”WHO IS THE BRAZILIAN LUXURY CONSUMER? Brazilians are fashion addicts
  14. 14. Brazilian consumers are increasingly sophisticated and opened to new consumerexperiencesBrazil has always had its selected group of “Nouveau riche”. This group of people isdistinguished by their extravagant tastes and for their tendency to emphasize theirsocial condition.Over a half of Brazilians are internet users and on line shoppersWHO IS THE BRAZILIAN LUXURY CONSUMER?
  15. 15. WHO IS THE BRAZILIAN LUXURY CONSUMER?* Average total sale per total transactionsWEALTY WOMEN SPENDING São PauloUS$ $ 3,500 a month on clothes92% paid in credit card premium47% has a paid jobMillionaires club are big spendersSource : La Clé
  16. 16. WHO IS THE BRAZILIAN LUXURY CONSUMER?Source : Boston Consulting Group and Ipsos Institute
  18. 18. When it comes to purchasing expensive items, customer service is the key influential factor:•Personal Shoppers•Personalized Products•Private Sales Events for Special ClientsSOME KEY FACTORS FOR BRAZILIANS BUYERRegional CustomizationBrazilian clients tend to develop a long term relationships with their favorite sales personCustomer service is also a magnet for shoppingBrazilians do shop abroad, usually on vacation or shopping trips. Miami and New York being thetwo most frequented cities.
  19. 19. Credit facilities - In Brazil you can buy everything by payment plan, even luxury goods(70% of purchases in the luxury sector are divided into installment payments on credit cards orchecks)Customer’s recognition of the superiority of imported productsMany international luxury brands are repositioning their prices down to reflect similar prices toother emerging marketsDespite this prices of luxury goods in Brazil, including those of local designers are already veryexpensive comparing with other markets in the worldSOME KEY FACTORS FOR BRAZILIANS BUYERRegional Customization
  20. 20. Brazil 2013 - Luxury Market Intelligence ReportContact LuxuryLab
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Brazil 2013 luxury market intelligence report


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