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LUXURY MARKET: BRAZIL

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Barbara V

on 23 January 2014

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Transcript of LUXURY MARKET: BRAZIL

THE LUXURY MARKET IN BRAZIL
Luxury Market
Characteristics
Leading
Product Categories
Geographic Market
Structure: Luxury
Consumer Profile (Who?)
Consumer Behavior

Shop in big malls (safety)
Average amount spent in a luxury mall: €1,300
€3,200 during Christmas time

Brazil's Timeline:
Key Milestones
Next Decade:
Macro-Economic Perspective
Influence of 2014 FIFA World Cup and 2016 Olympics
Boost Brazilian economy
Heavy capital investment will benefit many different industries
Large international players to enter the Brazilian market
Internet retailing: promising channel
Growing e-retail investment to reach wider consumer base

Opportunities & Threats
Growing "Brazilian bourgeoisie"
6% of global market by 2025
31% estimated growth for next 5 years
Thrust for intentional fashion brands
Prefer to shop at home than abroad
Conclusion
Attractive Market:
Middle Class, HNWI & UHNWI
Growth Rates
Major emerging market (BRIC)

Shortcomings:
Taxation
Bureaucracy
Corruption (despite decrease)
Bibliography
Brazil: Key Factors
Opportunities
Economy begin slowing down
High disparity between socio-economic groups
Country's tax system & bureaucracy
Difficult for global luxury brands to manage
Threats
First Tier Cities
Second Tier Cities
Represents 70% of Brazilian luxury market
53% of luxury consumers live in Sao Paulo
Major Retail Locations:
Rua Oscar Freire (leading shopping street)
Malls:
Iguatemi Shopping
Cidade Jardim Shopping
Brazilia, Porto Alegre, Curitiba & Salvador

Ranked by expansion desirability (experts):
What?
Where?
Why?
How?
Looking for high quality
Sensitive to brands with logos on products
Instinctive & affectionate relationship with luxury brands

Motivated by hedonistic desires:
Self-indulgence
Reward oneself
Social status



75% of customers pay luxury products by installments

Consuming vs. saving (psychology of past hyperinflation)
Market Growth
45% growth between 2003 - 2011
2009
Financial Crisis
Brazilian luxury market not affected
US$ 6,45 billion (turnover)
11% increase from 2008

2013
56% Women Working
Women in Paid Work (% working population):
36.6% in 2005
56% in 2013
Increased financial/spending independence
2013
80% Purchases Abroad
Luxury: 2.5x more expensive in Brazil
Preferred Destinations:
US (39%), particularly Miami
Paris (13%)
2012
Social Networking
98% on Facebook
64% on Twitter
Advertising & word of mouth phenomenon
Events
2014 FIFA World Cup
2016 Olympics
Boost economy further
e-Commerce

Internet retailing: promising channel
Growing investment in internet retailing
Reach a wider base of consumers
Economic Buoyancy

Heavy capital investment -> benefit various industries
Large international players to enter market
Growth

Expected: 31% for next 5 years (luxury goods and services)
Crossroads of 3 Cultures:
1. European roots
2. Lifestyle: American Dream
3. Local cultural values


Rich & Middle Class
63% Women, 37% Men
47% Post-Graduates
33% aged 26-35


Digital Luxury Group
(2012)
Sales Growth (in R$ billion)
Market worth US$7 billion
Growing at 12% (2012)
Affluent Consumers
36 billionaires (2013)
165,000 millionaires (2013)
Barbara Victorino
Krishna Vamsi
Laizaiti Tuerxunjiang
Pauline Zsidai

50% of Sao Paulo
Major Retail Locations:
Fashion Mall
Leblon Shopping
Village Mall
1991
Financial Liberalization
Liberalization of capital flows:
Imports (including luxury products)
Franchising
Most chosen initial entry mode
Chanel, Marc Jacobs, Jimmy Choo
Foreign Direct Investment (later Chanel)

1994
End of Hyperinflation
Lasted from 1980 - 1994
Propelled consumers to spend vs. save
Spending mentality remained (positive for luxury)

1999
LV's Market Entry
Louis Vuitton's entry into the Brazilian market
Self-owned stores

2001
Chanel's Market Entry
1) Daslu Mall - Franchise (2001)
2) Leaves Daslu Mall (2010)
3) Opens in Cidade Jardim Mall (2010)
Self-Owned & managed

2012

24% Increase in Brand Awareness
2003
Lula Elected
Luiz Inácio Lula da Silva
Worker's Party
Crucial in increasing middle class

2012
53% Middle Class
2002: 35 million (38% of population)
2012: 104 Million (53%)
Accessible luxury sales
GEOGRAPHIC
5th largest (area)
8,459,417 sq km
DEMOGRAPHIC
6th largest (population)
201,009,622 (2013)
ECONOMIC
8th largest economy (2012)
GDP: US$2.33 trillion (2012)
Sao Paulo
Rio de Janeiro
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