OPINION: A world of ideas for your shop

Brazil

Between 1980 and 1994 Brazilian inflation rocketed an eye-watering 2,500%, leading to a culture of bulk-buying to avoid price hikes. Not surprisingly, it’s taken a period of economic success to really allow small stores to thrive in the country.

“With lower inflation and prices not going up every day it is not worth stocking things at home,” says Natan Rodeguero who, as vice president of Intelligence Services Latin America – part of the Global Intelligence Alliance – has led over 120 studies in this and other South American markets.

“With the new buying behaviour this has created, stores don’t need to be so big and have diminished in size,” he says.

Yet the economy isn’t the only reason why smaller stores are winning out, he adds. “With the aging of the population, it made more sense for retailers to open more stores in more districts.

So now, instead of a few megastores, you can find stores of all brands in pretty much all districts – sometimes two or more stores of the same brand per district.”

One other external influence stands out too. According to the respected Fundação Getúlio Vargas (FGV) organisation, 40 million people rose from what is designated the lowest “D” and “E” classes to the middle class “C” in Brazil, between 2003 and 2011. In total, C class now represents 54% of the Brazilian population.

“With a stronger power of consumption of this emerging C class, retail brands saw the need to create new store brands to target this specific slice of the population,” says Mr Rodeguero. “All the big brands created a new brand, with lower-cost products, simpler stores, in specific neighbourhoods.”

This sort of movement has piled pressure on independent “Mom and Pop” convenience stores, which have been quick to react to the needs of the modern Brazilian consumer. “These smaller stores only accepted cash in the past. Now (over the past 10 years), with a larger share of the population being “bankarized”, even very small stores will accept cards today,” he says.

Key products

Changing customer expectations and wider availability are helping transform c-store ranges. “Until recently only around five brands of beer were available,” says Natan Rodeguero: “Today it’s more likely to be 25 in well-located stores.”

He’s seen a similar change in other categories and after years of being presented with a standard soap and shampoo on shelves, skincare and hair treatment products are become more widely available to more demanding consumers.

In a sign of the country’s development, more sophisticated kitchen gadgets aren’t widespread, but customers are getting more used to buying them and this is therefore a clear sales opportunity.

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