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Brazil Retail Industry ? May ?07 Brought Good Results for Retailers
Oct 09, 2007

Brazil reported healthy growth in retail sales in May due to its economic growth, rising purchasing power and changing consumption pattern. It was also due to decline in borrowing costs.

REUTERS reported Brazil’s retail sales of May 2007 increased over April more than the expectations, as per the government data of July 16 2007. The reason for this increase was  the decline in borrowing costs that made it cheaper for consumers to buy clothes, television sets, and cars.

Statistics agency IBGE (Brazilian Institute of Geography and Statistics), which conducted the survey, found an increase in the retail industry because of 8.2% hike in supermarket, food, drinks and tobacco sales. 16% and 10.4% were the increases in Textiles and clothing sales increased by 16% and furniture and appliances sales rose by 10.4%.

Buoyed by the lowest annual inflation rate since 1999, Brazil’s central bank had cut down the standard lending rate to an all time low, fuelling demand for goods like furniture, large appliances, food, clothing and books. Brazilians have also been prompted by lower borrowing costs to raise total consumer lending to 25% from 2006.

Retailers got good profits, thanks to early summer promotions in the first four months of 2007 and better merchandise. The boost in overall retail sales was also due to the food and drink retail market. Greater consumption of drinks, seafood and fruit are reasons behind the growth of the entire retail sales in May 2007.

With temperatures rising above normal across the nation, the consumers splurged in beverages in order to beat the heat. The improving income is indirectly affecting consumer spending. There was solid sale in summer clothing segment, which pushed up overall apparel sales. Consumer spending across the country is also fuelled due to the growth in employment.

The primary reasons behind the growth of the Brazilian retail market are economic development, rising purchasing power and changing consumption patterns. Even the government in Brazil is promoting consumer spending to benefit expansion in the fastest growing economy in the world, since it cuts corporate investment.

The research analyst at
RNCOS believes, “The growing Brazilian retail market will boost Brazil’s economic power, and global trend have vital implication for the retailers of Brazil. Changing lifestyle and powerful income growth are behind eh country’s growing retail sales but the credit also goes to the market-oriented strategies adopted by the retailers to boost the sales”.

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