British luxury brands are planning a Brazilian invasion. According to a recent report by Walpole, which represents the British luxury industry, only 13% of British luxury brands have operations in Brazil, but with the Olympics and World Cup coming up, 52% of brands have plans to enter the market.
That's a big increase. As part of my contribution to The Future Laboratory's Luxury Futures Report 2013 (which is being proof read as I write), I spoke to Carlos Ferreirinha, president of consultancy MCF Consultoria, to find out more about the Brazilian luxury consumer and help brands target their Brazilian strategy accordingly.
How big is the Brazilian luxury market?
In 2011 it was worth BRL $18.5 billion. According to surveys conducted consistently with companies in that business segment, in 2012 we project a growth rate of 20%, which we believe will remain for the years to come.
How many high net-worth individuals are there?
Classes A and B together have around 22.5 % of the population. These families have a monthly income over BRL $5,100. According to "The Luxury Market in Brazil - Consumer Profile" survey conducted by MCF Consultoria in partnership with the GfK institute, 33% of consumers are between 36 and 45 years old; 32% between 25 and 35; 35.21% between 46 and 55; 9% are younger than 25 years old; and 5% are older than 56 years old. Women represent 63% of the consumers.
What does the Brazilian luxury consumer buy?
Brazilians follow the natural dynamic of luxury consumption in the world: accessories, perfumes, cosmetics, shoes, handbags, clothing and those higher volume products as property and cars are also very significant.
How are their tastes and shopping behaviour changing?
There is a recent growth of the Brazilian middle class, which has an aspirational consumer behaviour; he or she wants to mimic traditional consumption, which leads to consume renowned brands. We are living a moment of democratization of luxury, not popularization. We have a thriving and aspirational middle class, and the brands are aware of this movement and create opportunities with a lower price line, diversified product lines or even new brands that deliver prestige and sense of exclusivity that resemble the original brand.
How does he or she shop?
The strength of Brazilian consumption is increasingly concentrated in shopping centres. The best opportunities are in the malls and not on the streets.
Which are their favourite brands/shops?
Also according to "The Luxury Market in Brazil - Consumer Profile" survey, consumers are preferring brands of absolute luxury, demonstrating a maturing process of consumption. Famous and iconic brands being preferred, including those that recently arrived in Brazil, are Louis Vuitton, Chanel, Prada, Hermes, Tiffany & Co., Rolex, Gucci, Ferrari, Christian Dior and Armani.
What makes the Brazilian luxury consumer different to those in other countries?
The Brazilian is an impulsive consumer, and this is one of the reasons we have seen the arrival of large international brands the past few years. Furthermore, Brazilians have as a trademark the need of an attentive
and differentiated service. Brazil will still be a great school for the service area to the world, given the high standard requirements of the local consumers. Our market has a classic peculiarity: paying in installments. Several brands, when they arrived in Brazil, replicated the business model that they used in other countries, but were slow to understand that to succeed locally they would need to adapt to our reality. And Brazilians like installments, even when they can afford to purchase without it.