Panorama of Retail in Latin America: Brazil
Perspectives for the Giant of Latin America
In this ‘Panorama of Retail in Latin America’ blog, we offer a modern vision of the challenges and new trends in the ever-changing retail sector, which forces companies to change priorities in order to take advantage of the new opportunities offered by the sector, as well as overcome these challenges.
We addressed some of the most relevant aspects of retail in Latin America and made a comparison with other countries in the region, which allowed us to take a look at their own challenges and possible opportunities retailers have in each of the countries. In this article we addressed Brazil, the giant of Latin America.
General Data of Brazil
- As of January 2021, the total population of Brazil was 213.42 million inhabitants (51% women, 49% men), with an average age of 33.5 years and an urbanization rate of 87%.
- The country has 205.8 million mobile phone connections, with a penetration of 97%.
- Internet users are 150.4 million (71% of the total population), and it has increased year-on-year from 2019 to 2020 by 8.5 million (+6.0%).
There is a total of 140 million (66% penetration) of active users in social networks. The social trend in the country is clear, with an increase of 8.2% (+11 million people) in the number of social network users from April 2019 to January 2020.
Brazil has more than 130 million users of Facebook (the third largest user base in the world), more than 50 million Brazilians on Instagram (the second base on the planet) and more than 120 million on WhatsApp. It is the Latin American country with the largest population of social network users.
Retail Growth in Latin America’s Giant
Brazil ranks 71 out of 141 in the World Economic Forum’s global competitiveness index. The Brazilian economy has a stable performance and is ranked 13th globally, for its volume of Gross Domestic Product (GDP).
The World Economic Forum defines competitiveness as “the set of institutions, policies and other factors that determine the level of productivity of a country.” So we can say that Brazil does have good conditions to invest in Latin America.
Brazil Trade Statistics report that Brazilian retail sales “increased 4.5 percent from a year earlier in April 2022, accelerating from a 4.0 percent rise in March and higher than the 2.6 percent rise in March.” cent predicted by economists.
Brazilian retailers saw the most significant increases across a wide variety of products, in textiles, clothing and footwear (33.9 percent), fuels and lubricants (9.7 percent), supermarkets, food, beverages and tobacco (4.0 per cent), pharmaceutical, medical, orthopedic and perfumery articles (3.5 per cent). percent), and other personal and household items (1.5 percent), according to statistics from Trading Economics.
Electronic commerce in Brazil has distinguished itself for being one of the most mature in Latin America. According to Americas Market Intelligence (AMI), between 2020 and 2021, e-commerce in Brazil experienced a powerful growth of 38% to reach 153 billion dollars. The consulting firm AMI expects the growth of e-commerce in Brazil to continue increasing at a CAGR of 22% between 2021 and 2025.
After two years marked by unprecedented mobility restrictions, online shopping in Brazil is still larger and more mobile-oriented. “The largest e-commerce marketplace in Latin America rose to the occasion and turned the bitter lemons of the COVID-19 outbreak into profitable lemonade at home.”
Statista statistics from 2021, tell us that revenue in Brazil from online purchases amounted to 161 billion Brazilian reais, more than double that of 2019 and almost 30 percent more than in 2020.
The Brazilian consumer is completely used to sales through mobile devices, known as m-commerce, which generate most of the electronic commerce of the Latin American country.
Commercial income is a trend that will increase in the near future. As protagonists of these times of change, the main players in this industry benefited from the coronavirus pandemic, and now the competition is fiercer than ever.
Also to give us an idea, the leading Latin American countries in connectivity are Brazil, with 165.3 million users, followed by Mexico with 96.87 million internet users.
What are the main retail trends in Brazil?
1. Retail digitization
According to data from the Monthly Trade Survey, conducted by the Brazilian Institute of Geography and Statistics (IBGE), the sales volume of retail trade in Brazil ended 2020 with an increase of 1.2% and a growth of 6% in nominal income.
Part of this growth was driven by the fact that, between April and September 2020, 11.5 million people made their first online purchase and, in the same period, around 150,000 new virtual stores appeared in the country, from small businesses to large physical networks that migrated to the web.
The digital transformation left theory behind and went into practice in companies in all retail segments, even in those that were less digitized until then, such as construction materials and supermarkets.
2. Pix – new payment method
The arrival of Pix (Central Bank Instant Payment System) is making more accessible services such as transferring money between people, paying for purchases and bills, and even collecting taxes and fees.
For retail, this represents a huge opportunity during and after the pandemic: business growth driven by customer acquisition and retention.
In the case of electronic commerce, the great advantage of Pix will be the optimization of payment processes, through simplified mechanics and reduction of delivery times due to the rapid confirmation of transactions.
3. Data: analysis, management and personalization
The storage, analysis and organized management of data continue to be the great technological differentials in the segment. Knowing how to explore the information contained allows the company to deepen its knowledge of the customer’s profile and invest in customizations in the consumer’s experience.
According to a study by Applause, a company that specializes in crowd testing and digital quality, 91% of consumers are more likely to shop at businesses that remember their information and can offer relevant recommendations and deals. This highlights the importance of the customer experience.
4. Frictionless retail IT
Is becoming very clear that customers are looking for convenience, personalization, agility, security and ease in their shopping experiences, from choosing the desired product to payment, in physical and virtual environments.
The new platforms need to identify the consumer, both in the physical and virtual environment, analyzing their purchase history, habits and preferences, minimizing friction, as well as interruptions in sales.
5. New means of payment aimed at financial inclusion
With the increase in demand for the use of online services, the financial and retail sectors have opened a window of opportunities to offer new services, in addition to transactions that facilitate the population’s access to other forms of financial transactions and credits.
The need for greater financial inclusion of the population is seen as one of the retail trends in Brazil, since it allows an even closer relationship between stores and clients.
6. Customer-centric vision and increased competition
This trend is not new, but it is possible to see that the increase of competition has made retailers rethink the whole experience in favor of the customer’s needs and desires, making the retail market more and more customer-oriented.
The new dynamic that is being established, based on new means of payment and more innovative ways of selling in retail, has the potential to further foster competition in the sector, which we are already witnessing with the growth of the new digital businesses during the pandemic.
7. New sales models
The user’s appreciation of convenience is reflected in the growth – both in launch volume and in consumer acceptance – of applications or new applications within existing products. Therefore, companies have the ability to expand and improve remote customer service.
With a Services Marketplace, for example, a company can offer the convenience of contracting essential services or desired digital products within its own application, putting them in the palm of the customer’s hand.
8. Impact on physical stores
The growth of online commerce forced Brazilian retailers to reassess the role of their stores, which led to a reinvention of points of sale. In the post-pandemic, the physical shopping experience should add even more value to consumers.
What should happen is the consolidation of an increasingly hybrid model between the digital and the physical.
9. Anti-fraud solutions to protect retail transactions
Although the pandemic has accelerated digital trends, it is also, in some way, responsible for the growth of fraud attempts in online payment methods and transactions.
The increase in the circulation of data, instant payments and digital transfers is consistent with the security that retail companies must incorporate into their systems.
10. Cultural transformation of retail
The disruption of the sector will only fully occur when there is a change in thinking and behavior within companies, so that technological evolution is intrinsic.
Companies in Brazil must develop solutions that are relevant to the national reality and that can be implemented without friction, so that they become part of the culture of a given retail chain.
This movement helps organizations in the sector to lead the evolution of their operating models, fostering competition and contributing to market growth.
What’s next for Brazil?
“Retail needs to move faster than ever!” notes Brazilian Market, explaining that Brazilian retailers “have a window of opportunity to offer solutions that truly transform the lives of their customers.”
It is a fact that the New means of payment, access to credit, digital experiences and reduction of sales frictions, are some of the examples that should be on the agenda of the retail sector in this post-pandemic world.
The retail sector promises a lot for the Latin American giant; the growing innovation and the adoption of new technologies make Brazil one of the countries in America with the greatest retail potential.
Being one of the countries with the greatest potential and the largest market, retail trade in Brazil will continue to set innovative trends that will give much to talk about in the near future.
Are you ready to take advantage of the Retail Potential in Latin America?
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