Even though still modest and corresponding only to 1% of the population, the market for luxury goods in Brazil have presented opportunities for growth and investment.
What is the Size of this Market?
When it comes to the luxury market, the fashion sector is the most promising one, with 26% of the Brazilian luxury market. 35% of this amount corresponds to foreign companies. The next one is the market of shoes, with 19%, followed by the clothing/apparel (18%), perfumery (17%), food (12%), jewelry (11%), automobiles (9%), hospitality (9%), alcoholic beverages (8%), cosmetics (8%) and furniture (7%).
Retail corresponds to 61% of this market, while services and industry correspond to 24% and 15%, respectively.
Foreigners have been more successful in the sectors of fashion, shoes, clothing/apparel, automobiles and cosmetics. On the other hand, the Brazilian market is much stronger when it comes to food, alcoholic beverages, furniture and hospitality.
Foreign market is weak when it comes to services and industry, having 70% of its profit concentrated on retail.
In terms of legal entities, the market is mostly composed by men (54%) and the most expressive age group is from 36 to 45 years old. Foreign women are buying 12% more than Brazilian women, who correspond to 40% of the market.
As for final consumer, 58% are women and 63% of them are between 26 and 45 years old. In terms of educational level, 36% are undergraduate and 47% have a post-graduation degree. [São Paulo state concentrates 66% of these consumers, being 53% concentrated of the total market concentrated in São Paulo city. 45% of them earn from BRL 10.376 to BRL 16.600.
In 2009, the average amount spent per purchase is of BRL 2.726. The major justifications for the purchase are the glamour of the brand (40% of the brands and 53% of the international ones), exclusivity of services and goods (35% for foreign companies and 44% for the national ones) and exclusivity (15%).
From 2009 to 2010, Brazil experienced a growth of 22% in investments, adding up to BRL 15,1 billion. In 2010, investments were mainly focused on:
- Communication (15%)
- Events (15%)
- New stores (12%)
- Brand image (9%)
- Manufacturing (9%)
- Marketing (8%)
- Sustainability (8%)
In 2010 foreigners invested more than twice the amount invested by Brazilians in the communications sector. Still during this period, it was observed a growth in the number of self-managed businesses (from 78% in 2009 to 86% in 2010) and in the number of multi-brands (from 33% to 50% in the same period of time).
Back in 2009, investments in expansion were mostly concentrated in São Paulo (89%), Rio de Janeiro (56%) and Brasília (22%). In 2010, the investments in São Paulo and Rio de Janeiro decreased significantly, going to 54%and 39%, respectively. This decreasing promoted the growth of other cities, such as Brasilia and Belo Horizonte, that significantly increased their investments in 2010, and it also gave room to cities that did not use to receive much investment, such as Porto Alegre, Goiânia, Curitiba, Florianópolis, Recife and Fortaleza. Besides Rio de Janeiro and São Paulo, Brasilia is the most promising city in Brazil.
Major Players and the Economic Crisis
Major players in Brazil, both national and international, are related to the sectors of fashion, jewelry, shoes, apparel and perfumery.
National major players are:
- H. Stern
International major players are:
- Louis Vuitton
- Giorgio Armani
- Marc Jacobs
- Grupo LVMH
- Tiffany & CO.
Due to the global crisis of 2008, 41% of the companies had a lower profit than the one predicted to the year of 2009. However, only 6% of the investors have decided to cease their investments and 73% actually decided to speed up the investments. Retail was the most affected sector, with 48% of its companies closing the year of 2009 with a lower profit than the predicted one. Out of all companies, 74% affirm that the crisis still isn't over.
When asked about the projects for next years, 33% of the entrepreneurs said to be working on the expansion of the targeted market, 30% on the enforcement of the brand, 20% on the opening of their own stores and 7% on CRM.
When it comes to obstacles, 53% of them pointed out the high tax burden, 10% complained of the size of the market (which corresponds to less than 1% of the Brazilian population and 9% pointed out human resources.
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