“Brazil is a myth,” the head of business development for international at Debenhams, John Scott, said to me. I was hosting a breakfast discussion on the branded fashion market for Drapers and the topic of international retailing came up. Obviously John believes Brazil exists; he’s just not convinced by the opportunities it can offer UK fashion retailers because of the high import duties the country imposes.
It’s a frustration for Debenhams and many other UK fashion businesses. At another conference I attended recently, Debenhams’ international director Francis McAuley and the then boss of Oasis and Warehouse, Mike Shearwood, urged the UK Government to lobby to reduce Brazil’s sky-high import duties. This subject formed the basis of my report into retailing in Brazil for Drapers.
But as my research found, little is being done to address it. The Brazilian Government is unconcerned and remains protective of its domestic retail scene. And why shouldn’t it? Topshop opened its first store in São Paulo's JK Iguatemi shopping mall late last year, swiftly followed by another last month. Early indications are positive – “our sales were phenomenal” said Paul Gould, international director of Topshop’s parent company Arcadia – and Arcadia is now considering taking some of its other fascias to Brazil. Then there’s Zara, which is also enjoying Latin American success with 45 stores in Brazil. It manufactures its collection for the southern hemisphere there, so it can get around the import duties. But Topshop doesn’t. Instead, it has a more premium positioning in Brazil so its prices are much higher. It’s a tactic employed by many international fashion businesses and the result is often the same product at twice the price.
I was convinced that this strategy had an expiry date. If Brazilians are not aware already of the price discrepancy – and I’m sure many are – improved and more widespread internet coverage means they soon will be. With domestic retailers upping their trend credentials and teaming up with local designers or celebrities to launch exclusive collaborations, will Brazilians continue to knowingly spend so much more on a Topshop dress? Or, as more middle class Brazilians travel abroad, would they not buy a Zara top from Spain instead? I certainly wouldn’t buy a coat that I knew was half the price in a different country for no other reason other than import duties.
But then the UK high street is the most sophisticated in the world. As a fashion journalist, I hear this all the time. It’s democratic, diverse and sets the trends. If anything, improved internet access and social media, of which Brazilians are huge fans, only serves to highlight what’s cool in fashion and, therefore, what you must be wearing, if you so care.
Yet what intrigued me the most during my Drapers research was a particular finding from Google and OC&C Strategy Consultants. Their report on the internalisation of ecommerce found that the top five most searched-for international retailers by Brazilians were Asos, Topshop, Feelunique.com, John Lewis and Net-a-Porter. I’m not surprised by the majority of these, but John Lewis? Really? Don’t get me wrong, John Lewis does a great job here in the UK in terms of product and service, but it doesn’t operate in the fast, trend-led sector dominated by Asos and Topshop, for example. Maybe its distinctive Britishness is appealing. Well, if John Lewis does decide to trade in Brazil, it may have to review its Never Knowingly Undersold proposition…