Visual Merchandising and Store Design | VMSD.com

(July 2009) posted on Mon Jun 29, 2009 12:28pm EDT

South America’s biggest country has a stable banking system, an emerging middle class and a taste for consumption.

By Steve Kaufman

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With the world locked in an economic crisis, there aren’t many growth opportunities for U.S. retailers. But one ray of light is Brazil. Short-term, it’s unlikely to avoid a slide into recession. Fourth quarter 2008 GDP posted the sharpest decline in a decade and The Economist predicts a further 1.5 percent slip in real GDP growth this year. But that doesn’t change Brazil’s potential as “a relatively young, developing economy that’s catching up with the more mature economies of the United States and Europe,” says store design veteran Bryan Gailey. “There’s a growth of consumerism all over the country, not just in Rio de Janeiro and São Paulo.”

Brazil’s consumer activity is reaching out beyond the country’s two largest urban centers to Salvador, Brasilia, Fortaleza, Belo Horizonte, Curitiba, Manaus and Recife, all cities with more than 1.5 million residents. In total, this country of 200 million has 14 cities with 1 million or more people. Approximately 56 percent of the population is less than 29 years old.

More to the point, though, is the growing middle class, eager to advance into Brazil’s renowned “pleasure consumption” culture. And with a stronger currency and inflation mostly in check, Brazilians are on a spending spree. The economy grew 5.4 percent last year. Generous credit terms allow Brazilians to pay for refrigerators, cars and even plastic surgery over years instead of months.

So Brazil now seems like low-hanging açai just ripe for the picking. Brian Dyches, studio principal, international store design, at Little’s Costa Mesa, Calif., office, notes that Brazilians comprise the third-largest contingent attending the National Retail Federation convention and expo in New York each January. “They’re eager to see what we’re doing,” he says, “and to learn.”

Mass merchandisers of home goods, consumer electronics and food are experiencing the greatest growth. Walmart, one of the few U.S. retailers in the country, now has 315 units in 17 of Brazil’s 26 states and says it will expand to all of them. Until the recent recession helped fuel Walmart’s sales in the U.S., the retailer’s Brazilian sales were growing at more than twice the pace as here.