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Momentum

Respect is good

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

Brazilian retail has become more international, mature, formal, multichannel,


professional and relevant. Respect is good and one deserves it.
In the last ten years, Brazilian retail has jumped from an era of a lot of
informality, teenager professionalism, low representation in the economic
scenario, a national presence and with low maturity level, going to a very
different situation, with remarkable evolution in all these aspects, due to their
own merits and the huge transformations in the economic and business
environments.
The evolution of the presence of women in the economy went up from 32.4% in
1985 to 40.7% in 2009 and added to aging population and the economic
development of the country, leading to the rise of lower income classes and the
growth of smaller markets, as the North, Northeast and Midwest, have created a
more consistent country.
These elements have helped shaping a new market reality, with the need to
serve new consumer demands, as they became more informed and, mainly,
disputed. And there are more consumers today. The growth of the emerging
midclass, who accounted for 50% of the population in 2003 and now are 68.1%,
is also a pivotal issue in this process.
On the economic view, stability and low inflation have made all the difference,
allowing the GDP to continue to grow, in spite of the 2009 hiccup, small when
compared to the global turmoil. The evolution of the families’ real income and
the growth of employment, in spite of the global financial crisis, have led to
changes in the quality, availablity and structure of the products and services
sales. The significant rise in the consumer credit offer, that jumped from 5.9% to
15.7% of the GDP in the last ten years, was another element leading to a deep
market transformation, to the family spending growth and, therefore, to changes
in the retail behavior.
On the product offer side, there have also been huge transformations, with a
significant rise in the consolidation in many segments to answer to a more
competitive scenario, larger foreign presence and growing investment in the
launch of new products, brands, direct distribution channels and technologies.
New store formats, expansion of relationship and sales channels, new media in-
and out-of-store, different supplier relationship models and growth of the private
label presence in retailing.
At the same time, new store fascias, new services incorporated and the faster
evolution of the store openings and chain’s organic expansion, it all has been
and is part of the mix used by retailers to use the never-seen positive stream
that has spread on the market.
In this period the segment has also noticed its growing importance, as it has
become the largest private employer, only behind the government, and noticed
it had not yet been represented accordingly. Thus, looked for larger spaces in
the political and economic scenario and took responsibilities according to it
representativeness. Among the actions, the Institute for Retail Development
(IDV) was created and in five years has coordinated or took part on many
important issues to help shaping the new market momentum, as the tax cuts for
furniture and electronics; the revision of the part-time retail policy; the extension
of BNDES credit to retailers; new credit policies; and, mainly, a new government
approach on informality and the reduction of the tax burden.
Much has happened and much more will happen in the next years, as the
companies that have grown and developed based on tax evasion will not be
competitive anymore. But the best is yet to come.
In the next years, retail will consolidate even more, specially in segments as
drugstores, apparel, DIY and foodservice. It will also become more global, as
the share of international companies in the Brazilian market goes up, through
venture capital companies and private equity funds. It will also be more mature,
as operations improve and responding to more prepared and demanding
consumers.
But the main change will be in the way of strategically thinking and acting.
Everything that has happened in the last ten years has not planned this way, but
the retail’s ability to react quickly to the market changes has made it happen.
For the next ten years, one can foresee the continuity of growth and stability
and the structural, economic and behavioral changes to be leveraged in this
process. One is able to plan with a long-term view and act on the perspective of
what lies ahead can bring even faster growth to organizations, depending only
on each company’s ambition, propositions and ability to execute.
A beautiful view of higher dreams.