Brazilian Retail News

Year 09 Issue # 358 São Paulo, October, 04th, 2010 Phone: (5511) 3405-6666

Supermarket sales up 4.74% on year

According to data released by trade group Abras,

Brazilian supermarket sales have gone up 4.74% in
the January/August period year-on-year, after an 1.2%
rise in August over the same month last year. Month-
on-month sales dropped 1.4%. Abras said year-to-
date performance have been leverage by alcoholic
beverages (+16.3%) and non-alcohol beverages
(+11.1%).

Economy slows down in Q3

The Brazilian economy reinforced the slowdown trend in Q3. After reduzing growth from 2.7% in Q1 to 1.2% in
Q2, figures dropped again to 0.2% in July over June. Year-to-date, however, the Brazilian economy has been up
8.5% over the January/July period in 2009.

French 5àSec purchases

Brazilian master franchise

5áSec, one of the world’s largest dry

cleaning chains, announced it has
purchased its Brazilian master franchise,
its largest operation worldwide. In the
country since 1994, it has more 320
stores. The company also announced the
creation of a Latin American subsidiary,
5àSec LATAM, headed by Nelcindo
Nascimento, former Brazilian master
franchisee. 5àsec intends to build a 1,000
store chain in Latin America until 2014.

BRAZILIAN RETAIL NEWS 1 10/04/2010

Brazilian Retail News
Year 09 Issue # 358 São Paulo, October, 04th, 2010 Phone: (5511) 3405-6666

L’Oréal to double presence in

Brazil

French cosmetics industry L’Oréal

intends to make, by 2020, half of the
Brazilian population use the company’s
goods regularly. The company, poised to
increased its sales in the two-digit range
this year, is structured in four divisions:
professional goods, active cosmetics,
luxury goods and mass goods. Today, 25%
of Brazilians, or 50 million people, use L’Oréal currently. The company owns brands such as Colorama, Garnier,
Elsève, Lancôme, La Roche Posay, Kiehl’s and Vichy.

E-commerce sales soar 41.2% on year

Internet sales have reached R$ 7.8 billion (US$ 4.54 billion) in the January/July period year-on-year, according
to Fecomércio-SP and e-bit. Forecasts
point to a 35% sales rise this year, to R$
14.3 billion (US$ 8.26 billion).

Walmart forecasts Children’s

Day sales to rise 20%

Walmart has prepared several

initiatives to increase its sales by 20%
year-on-year in this Children’s Day
season. The largest bet is on licensed
goods of characters as Ben 10, Hot
Wheels, Barbie and the Disney
Princesses.

BRAZILIAN RETAIL NEWS 2 10/04/2010

Brazilian Retail News
Year 09 Issue # 358 São Paulo, October, 04th, 2010 Phone: (5511) 3405-6666

Momentum

How retail can add value to Brazilian exports

Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza

Brazil has imposed itself the goal of exporting US$ 180 billion this year, and it will be achieved mainly by
commodity goods, in spite of the growth of added value goods. Historically, exports have accounted for 8.5% to
11% of the country’s GDP. At the same time, imports have been growing fast, leveraged by the currency exchange
and the rising domestic demand, helping to keep inflation under control in an upward spending scenario.
The low share of exports over the GDP has helped the country to be sheltered during the recent global
economic and financial crisis, that has hit hard on many export-driven economies. But the mere chance can’t be
used to justify the fact one economy as the Brazilian one has such a low export volume, so deeply relying on
commodities, specially agriculture and ore.
It would be better if the country increased, in a relevant and strategic way, the volume and vlaue of exports,
creating tools and incentives so added value goods could be in this mix. And the high profile Brazil will have due to
the World Cup and Olympic Games creates a window of opportunity. But nothing happens by chance.
FMCG, automotive and IT industries have been leading this process, with some government support, specially
through export promotion agency Apex, but a national strategic plan should develop programs to drive more focus
on the foreign market, in spite of today’s currency exchange rates and the fast growing domestic market.
Brazilian foreign direct investments have been growing, reaching US$ 8 billion in the first half this year, due
to an ambitious approach of enterpreneurs who have expanded their reach in the global market, specially in the
services, engineering and construction segments.
Added stimulae to foreign investments and export incentives could create a virtuous scenario to let Brazil
better use what has been created by chance, making growth and expansion irreversible and self-sustainable. One
way of doing this would be creating incentives to allow Brazilian retailers, even in moments of domestic growth, to
invest on building foreign ventures to bring overseas products with brand, concept and positioning. And that could
benefit on the favourable winds that will increase the value of the Brazil Brand.
This effort has been already made in the franchising area, directed by the national trade association ABF,
with positive results being reached and showing ambition and competence in resource management bring in
results. But the opportunity is so bigger that could embrace the whole retail sector.
It’s not, however, a simple alternative. Today, retailers have been focusing on speeding up expansion and
business in the country itself, increasing the number and variety of stores, developing digital channels, building the
infrastructure to support this growth and improving logistics and sourcing to bring more and better products to the
market at more competitive prices. It is unlikely companies would change focus to think on the foreign market, but
it would be instrumental to have a long-term strategic project.
And only a strategic, structured approach, with start, middle and end, and mainly with credibility and
relevant incentives, could make this deed feasible. Would it be too big a thought?

Gouvêa de Souza & MD Desenvolvimento Empresarial Ltda.

Av. Paulista, 171 - 10º floor
Paraíso – São Paulo – Brazil – Zip Code: 01311-904
Phone: (5511) 3405-6666 – Fax: (5511) 3263-0066
E-mail: gsmd-de@gsmd.com.br
Home-page: www.gsmd.com.br

BRAZILIAN RETAIL NEWS 3 10/04/2010