Brazil Luxury Market. Digital is ready.

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Brazil is the 6th largest economy in the world. With the 2014 world cup and the 2016 Summer Olympic games, all eyes are pointing to Brazil. And Luxury brands dream of a new market and sales growth. Unfortunately, Brazil is far away from most international Brands headquarters, which makes difficult a strategic implementation without a local support. Brazil has a tremendous potential in terms of digital strategies, your luxury brand just need to find the right partner. And this is how BRSL get into play.

Brazil, a giant who loves luxury

People know Brazil for Soccer, Carnival and friendly people. But did you know that it is one of the most promising luxury market for the incoming years? Not only because high-class tourists will massively visit the country in the next 10 years, but the internal market has a huge potential.

Luxury-Brazil-2014-2020

While economic crisis stroke the world since 2009, there are 4 countries that are playing things better than others. We call them BRIC, which is Brazil, Russia, India and China. While the last 3 have still issues to stabilise their markets in a qualitative way, Brazil seems to build a more sustainable luxury business.
According to Forbes magazine 2012-2013 study, Brazil has 36 billionaires and 136’000 millionnaires. What is the most surprising is that 1/3 of these people are under 35 years old. According to Forbes magazines, millionaire households will triple in Sâo Paulo until 2020. This shows the dynamics in which the country is. And with all the business coming to Brazil in the incoming years, this will benefit also the internal market.

Why Brazilians love luxury?

There are certain markets more interested in Luxury than others. Brazilians love Luxury and everything related with Luxury news. Why that? There are some interesting facts that might enlighten our path here.

Luxury-Brazil

Brazilians do it better

Brazilians are at the crossroad of many influences and cultures. Historically speaking, Brazil was founded by Europeans, Portuguese, and moreover got strong waves of immigration from countries like Italy, Germany, France, Portugal or Switzerland. This makes a natural attraction for Europe and cities like Paris, Milano, Geneva, Frankfurt or London. It sets a group of cultural references anchored in the common conscience of the people. So when it comes to luxury, things like fragrances, fashion, watches or cars are often inspired by European brands. This also make Brazilians very savvy and an interesting market to work with.

Brazil-USA

Another interesting topic is the influence of the American Dream. During more than 20 years, USA was an example to follow for many Brazilians. As the American hegemony on all South America was very strong in the 70’s and the 80’s, symbols of success were established. Wealthy Brazilians used to live or at least to have a house in Miami. It was almost mandatory. So all TV stars like Xuxa or Silvio Santos, Politicians like former President Collor de Melo, Singers like Ivete Sangalo or super models like Gisele Bundchen. Even Pélé has a house in Miami. Of course it was not exclusively for the lifestyle. There were also safety reasons. Wealthy families would send their children to American schools and universities so that they would pretend a better future. In popular culture, movies, stars and several brands were from USA, which also contributed to this American influence in terms of consumption and specifically in luxury habits.

The national market is strong

Something that became very strong in the recent years is the patriotic feeling of being Brazilian. People tend to stay more in the country, national internal tourism has a triple digit growth on the past 5 years (Valor Online). So Brazilians are happy to buy in their country (despite horrible import taxes).
These trend pushed international luxury brands to invest in the local market and open owned stores. Louis Vuitton, Prada, Fendi or Luxoticca opened true flagship stores some of them with very exclusive services that you cannot find everywhere. Of course the retail condition improved a lot in the past 5 years. Luxury shopping malls developed, specially in Sâo Paulo.

luxottica-brasil

When Louis Vuitton opened global store in Sâo Paulo with a 1’000 m2 of sales surface, they definitely set the tone. All these activities represented in 2013 a growth of 20% and brought the luxury market in Brazil to an amazing figure of 3 Billion US$ (Study Living Luxury).

Unknown luxury territories in Brazil

When we talk about luxury, It is always about Sâo Paulo and Rio de Janeiro. Like if the entire country was summarized by these 2 cities. Of course, withore than 20 million people living in these 2 cities, it represents a strong economic spot.

Sâo Paulo, the money maker

Sâo Paulo is the economic capital of the country. It is also very well known for the amazing Pizzas you can eat. Sâo Paulo is the richest city in the country. The number of Helicopters privately circulating in thr city is superior than in any city in the world. So where is money there is luxury. And for that the big city of 12 million people has established a solid retailer network in which international brands set up their stores.

Iguatemi-Sao-Paulo

Louis-Vuitton-Iguatemi

In Sâo Paulo, some areas are to be taken in account when it comes to establish your luxury business:

  • Iguatemi Faria Lima Shopping
  • JK Iguatemi Shopping
  • Cidade Jardim Shopping
  • Morumbi Shopping
  • Oscar Freire Street

Rio de Janeiro, where glamour is

Rio de Janeiro is part of top 10 destinations in any travel wishlist. The Carioca town has a “je ne sais quoi” that makes the difference. Going to Rio is a promise of happiness. We say often that you work in Sâo Paulo but you enjoy life in Rio. It is also the most visited city in the country for leisure trips and the second for business.
Every year, 6 million people visit Brazil for leisure. 20% of these tourists go to Rio de Janeiro. In 2011, $6.775 Billion were spent by tourists in the country. 2013 estimations crosses the level of $8 Billion (TTCI).

shopping-leblon-rio-de-janiero
According to the Tourism administration, Rio will triple the tourism activity by 2020 thanks to the exposure during the 2014 Wold soccer cup in Brazil and the 2016 Summer Olympic games (hold in Rio). Here are some hot spots for luxury shopping in Rio.

  • Leblon Shopping
  • Village Mall

Nevertheless, other cities are developing and the luxury brands are getting interested to these cities.

Brazilia, capital of elegance

Brasilia is probably more known because of Oscar Niemeyer than for the lifestyle in the city itself. From an architectural point of view, Brasilia is a human true wonder. And despite the fact living in such a conceptual city might sound complex, people born in Brasilia are pretty much attached to their city.

brasilia
It is the administrative city so the Federal government are established there. It is the richest city in Latin America in terms of GDP and the 3rd in Brazil. This is 3 times more than the average of all Brazilian cities.
You might think that most of the luxury customers are politicians or people working at the Federal government… No they would be more discreet than that :-)) most of the interesting customers are from high-tech companies, luxury Real Estate, restaurant and hotels owners. They are very rich and require special attentions: private showrooms, strong long-term relationships, deals… So the only way to achieve this is being present locally.

Iguatemi-Brasilia

Brands like Tiffany’s, Ermenegildo Zegna or Gucci are already well installed and many others are following. The most interesting areas for luxury shopping:

  • Iguatemi Brasilia Shopping
  • Conjunto Nacional Park Shopping
  • Pátio Brasil Shopping

Curitiba, lifestyle of the South

Curitiba is the biggest city of Brazil’s South area. For many it is one of the best cities in terms of way of living. People are particularly friendly and the authorities has developed in the past years the entire city structure. Modern transports, services and clever urbanism management. An interesting fact is that Curitiba has the highest % of Class A households. Several car constructors have establish themselves around the city which generated a lot of jobs and wealth.

Crystal-Plaza-Shopping-Curitiba

Crystal-Plaza-Shopping-Curitiba-luxury

Despite the fact the luxury business is still small, some Brands like H. Stern, Lacoste or Rolex are well established. The main shopping areas for luxury brands are:

  • Crystal Plaza Shopping
  • Patio Batel

Brazil, a media giant on the era of digital

The power of a healthy 200 million in habitants’ country is endless. Brazil became in the past 20 years a media giant not only in terms of television but also internet. Rede Globo is the second biggest TV commercial chańnel in the world behind ABC Television network. They are number one in terms of producing its own shows and programs. Founded in 1965 by media mogul Roberto Marinho, it is a huge business that also became a giant in the online world.
Internet was launched in Brazil in 1988. In 2011, 23 years later, Brazil is the 5th country in the world in terms of internet users: 89 million internet subscribers which means a penetration rate of 45%.

Brazil-Internet-Behavior
According to ComScore2013, consumers in Brazil spend 27 hours per month online in their computers. As a comparison, worldwide average is 24,7%. The same study says that 23% of Brazilians use their phones to access internet. Brazil by the end of 2013 became the 5th largest world market in Smartphones.
Another study made by McKinsey explains that 13% of Brazilians compare prices online with their smartphones while being in a store, and 24% check the internet while watching TV.

Brazilian-mobile-user

Another interesting fact is that 50% of total Brazilian internet population is under 34 years old and also that 65% of internet household connections are broadband like DSL/Cable. In big cities like Sâo Paulo, optic Fiber is being installed.

Brazil digital media consumption

According to Comscore, Brazil is today the 7th large audience in the internet worldwide. With a double digit growth in the past 5 years, the brazilian internet landscape is bigger than France or the UK. More impressive, 35% of all internet users in Latin America are in Brazil. This means more than 45 million unique visitors in a year. Each brazilian user spend 27 hours online per month in average, while the global average in Latin America is 22.7. This figure is bigger (over 30 hours) when we focus on the internet users under 35 years old. In Brazil, the 25-35 years old internet users spend more time online than any other part of the world:

  • Brazil: 31.8 hours spent online monthly
  • Worldwide average: 25.3 hours
  • Europe: 24.2 hours
  • USA: 19.9 hours

To give you an idea, only last December, more than 52 million Brazilians surfed the web from home or from work computer. this is a growth of 9% vs the previous year. And here is the split per region:

Brazil-internet-consumption

Social media is also a huge piece in Brazil. It represents more than 35% of total time spent online and since international social networks finally brought the portuguese version to their tool, Brazil exploded on that field. Facebook recorded last year 17’902 daily unique visitors. To give you an idea for comparison, Microsoft local websites (MSN) recorded only 12’189 unique visitors and the powerful Globo  only 8’601 daily unique visitors. In terms of engagement, Brazilians are also superior to worldwide stats. In deed last december Brazilians spent 579 minutes in social media, while the average worldwide is 328.3. In terms of Social network ranking, here is the Top 10 most visited social networks:

  1. Facebook – 43.9 million unique visitors
  2. Orkut – 12.3 million
  3. Twitter – 9.1 million
  4. Ask.fm – 8.4 million
  5. LinkedIn – 7.9 million
  6. Tumblr – 6.1 million
  7. Badoo – 1.8 million
  8. Deviantart – 1.6 million
  9. Vostu – 1.4 million
  10. Myspace – 1.2 million

In terms of time spent, Facebook is the titan who crushes all the others. 92.8% of time spent by Brazilians in social media is spent on Facebook.

Online retail is also blooming with intense growth rates. Luxury is not yet trully present in terms of online sales. Certain domains like Luxury Real Estate is developing quite fast although there are no online sales for it. Several websites in Latin America also propose Fragrances online sales, but it is still the beginning. Nevertheless, the online retail activity grew by 11% and here is the Top 5 biggest e-retailers in terms of annual unique visitors:

  1. Mercadolivre.com.br – 14.3 million unique visitors
  2. Americanas.com – 8.1 million
  3. Walmart.com.br – 5.6 million
  4. Netshoes.com.br – 5.3 million
  5. Casasbahia.com.br – 5.1 million

In terms of online video views, Brazil is the biggest growth of all with +18%. In comparison, US decreased by 1%, UK got a growth of 11% and the worldwide average is +3%. Despite of several local sites like UOL or Telefonica, Google and Youtube are the king of online video in Brazil (stronger than the Globo).

Search is also a strong segment that icreases a lot in Brazil. Last December, each searcher searched more than 140 times online for products, services, restaurants, addresses, videos, etc… The total amount of searches is splitted between Google sites but also Facebook and Mercado Livre.

As we see, Brazil has a phenomenon potential in terms of online activities as the internal market is wide and the internet penetration is huge. So advertisers use this to leverage Brand visibility towards dedicated target groups. In one year, Brazil display advertising delivered more than 800 billion impressions overall. This means more than 25’ooo impressions every second. the strong majority of these impressions were delivered on major portals and social media, especially Facebook. 2 advertisers are sattelized in terms of impressions delivered and paid. Dafiti.com.br and Netshoes.com.br. Their businesses are enourmous and they own certain themes with almost 100% SOV. The top online advertisers in Brazil by number of impressions are:

  1. Dafiti.com.br with 25 billion impressions annually
  2. Netshoes.com.br with 23 billion
  3. Netflix, Inc with 9.2 billion
  4. Microsoft Corporation with 9 bilion
  5. MRV Engenharia e Participaçôes SA with 8.5 billion
  6. Telefonica Group with 6.9 billion
  7. Pank! Negocios online with 6.7 billion
  8. America Movil SAB de CV with 5.9 billion
  9. Google Inc with 5.5 billion
  10. The Point LLC with 5.2 billion

In December we can see that Facebook was the Brazilian champion in terms of Ad impressions delivery with 29 billion impressions. Far away behind, in second position, is UOL with 7.3 billion and Globo with 7.2 billion impressions delivered. Everybody is investing in Facebook advertising as Brazilian fans are cheap to acquire, especially if you deal in portuguese. So every year, in the past 5 years, Facebook delivers a 3 digit growth rate for Ads impressions.

Brazil-Facebook-stats

With such a powerful market still under-covered, Brazil is pure gold for future advertisers who wish to have a consistent and strong presence in the market. Unfortunately most of big traditional communication agencies in Brazil are pretty much new to the digital world and despite of all the talent in building ads, they are still struggling with digital communication strategies. That is why we decided to make our monthly focus on BRSL, the first Pure Player in digital localized in Sâo Paulo.

BRSL, a Digital pure player 100% luxury focused.

In order to help international luxury companies to implement their digital strategies in Brazil, BRSL is the first digital agency in Brazil fully dedicated to digital strategies. LuxuryActivist followed the creation and foundation of this agency and now delivers an exclusive interview of Jérôme  Amoudruz, Founding director of BRSL. We get a lot of interesting insights that any Luxury company should have in mind before initiating its journey in Brazil.

Jerome-Amoudruz-BRSL

You can read the French version of the interview by clicking here.

LuxuryActivist (LA): After your great experience in Switzerland in the luxury goods sector , you are here in Brazil. What was the motivation to establish BRSL locally instead of managing things from Switzerland ?
Jérôme Amoudruz (JA):
I am convinced that to master the local internet by an international brand is a key element of its success in this market. The digital activity reflects the life of  people, its references, its aspirations , it is the mirror of society . To identify opportunities on the web, we need to understand and live it daily . On the other hand , Brazil is a country where informal relationships are as important as industrial relations. Questions of trust or workmanship are not always easy to find and our local presence allows us to offer local expertise while maintaining the requirement of international standards .
Our São Paulo office processes transactions and relationships with our customers local networks of distributors / subsidiaries. Our Swiss office facilitates international brands to purchase our services with simplicity while bypassing the fluctuations with the Brazilian Real .

LA: Now that you are well established in Brazil, what are the challenges you see for a luxury brand to settle permanently in the country?
JA: The luxury market is still very young in Brazil. Some prestigious Brands are present in Brazil for several decade as Cartier, Louis Vuitton or Hublot. Since 2010 , there has been a massive influx of international brands offering entry-level luxury products that meet the aspirations of a new class of Brazilian consumer . However, import tax barriers , heavy administrative processes in the country impact the price of luxury goods to an increase of 30 % to 80% compared in the USA for example. In this context , the challenge is big for new entrants and the first is to give value to local consumption. Some brands offer customized products exclusively available in Brazil while others are cutting their margins to minimize the differences in market prices .
In Brazil, as in other emerging countries, trends are changing very fast and it is necessary to observe them. The opinions of local leaders have a powerful influence and we can see luxury brands regularly associated with local personalities such as bloggers, sportsman or tele-novelas actors to work its reputation. The influence of the web on the purchasing behaviour of premium products is still underestimated by most of the international media while in Brazil this channel is mainly used by the most rich class and seems to be an appropriate filter to reach this population . Social networks, for example, Brazilians are addicted to Facebook and Instagram. The “tropicalization” of branded content is today a competitive advantage. Many international brands communicate on social networks in Brazil exclusively in English, in a country where only 37 % of managers speak English!
The web is also an easy access to the counterfeiting of luxury goods and this is unfortunately a very common phenomenon in Brazil . It is not uncommon to see on the first page of Google result of counterfeit products on the Brazilian Ebay : Mercadolivre . This phenomenon also explains a large volume of research that includes the word ” original ” associated with the name of luxury brands. Content production in Portuguese and efficient work of Search Engine Optimisation (SEO) is to my mind a priority for luxury brands in the Brazilian market.

LA: About BRSL , what is your philosophy and what are your advantages over your competitors , some of which are already established in the country for a long time ?
JA: BRSL is an innovative agency by our ultra-specialization in the luxury segment and the web channel concept . In Brazil , this type of agency does not exist. Advertising agencies Brazilian off/on have a great experience of mass communication but niche target interest much less. We strive for quality over quantity. We have a dual Brazilian and International culture. This approach allows us to take the role of mediator when working between international brands and their distributors / local subsidiaries. We speak 2 languages !
Moreover, the recent arrival of the luxury industry in Brazil highlighted the shortage of professional in this sector. Proof is a series of  “luxury consultants” that were born in recent years by offering courses and content to train professionals to the area whether for marketing or to POS. But still none internet jurisdiction. We offer 2 rare expertise on the market : the luxury industry coupled with the mastery of digital marketing techniques (our local team consists of Brazilian who lived a professional international experience) .

LA: Can you tell us about some interesting projects are you currently working on?
JA: We are currently working on setting up an E- commerce platform for a famous American luxury brand recently launched in Brazil . This is a very interesting project because we work with local distributors and digital brand management based in New York. We conduct parallel editorial animations in Brazilian Portuguese social networks of international brands. And interestingly we have more and more requests from Brazilian brands for our expertise in the industry.

LA: Last question, a very important one. In your opinion, who will win the world Football cup  in Brazil?
JA: The Protesters ! (laughs)! The World Cup is something very delicate in Brazil, it goes beyond the sport itsel. The massive investments, the “blind” work management as well as the World Cup expenditures deeply annoy Brazilians. I think they will take this opportunity to express their discontent with reason. My family is a mixture of several countries and football, a controversial subject. I must preserve peace in my marriage . I cannot answer this question 😉

We thank Mr Jérôme Amoudruz for his time, sharp professional eye and good humour. If you wish to know more about BRSL, here are the full contact bellow.
BRSL Digital Marketing Agency

No you know how to enter in the big game with Brazil.
LA

Digital-Luxury-Brazil-feature

Info sourced at Comscore 2012/2013, Wikipedia, Nielsen2013, Euromonitor, Valor Online, Mashable, Techcrunch.  All content is copyrighted with no reproduction rights available. 

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