Brazilian Retail News

Year 11 - Issue # 403 - So Paulo, September, 05

th
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 1
29/08/2011
Brazil Pharma, arm of BTG Pactual private
equity group, is looking for midsize drugstore
chains in the North and Midwest regions, in cities
as Belm, Braslia and Campo Grande. The
company wants to purchase major or minor shares
in these companies, but always maintaining the
owners running the businesses. Market sources
have been speculating on several deals, but Brazil
Pharma has not confrmed any of them.
H&M postpones arrival in Brazil
Swedish apparel retailer H&M has been
studying the Brazilian market in the last months,
even contacting some of the countrys largest mall
owners, as Iguatemi, BR Malls and Aliansce, to
gather more info. According to market sources, it
even asked Iguatemi for more information on the
high-end mall the company is building in So Paulo
(to be opened this November). A deal, however,
was not reached, as H&M is prioritizing its Chinese
operations before going to other countries.
Carrefour rules out partnership in Brazil
French retail group Carrefour said it doesnt need a partner in Brazil. The companys CEO Lars
Olofsson, visiting the country last week, affrmed the Brazilian ops are not for sale and the group is not
studying any partnership or merger in the country. Olofsson said Brazil is a pivotal piece in Carrefours
global strategy and so it will keep developing its position in the South American country.
BR Pharma wants to purchase midsize drugstore chains
Supermarket sales up 6.24% in July
Brazilian supermarket sales had in July a 6.24% growth in real terms over June, according to trade
group Abras. Year-on-year, sales rose 4.32%, also in infation-adjusted terms.
Drogaria So Paulo and Pacheco chains speed up market consolidation
Last month, Drogasil and DrogaRaia merged and created Brazils largest drugstore group. For a
short time. Last week, Pacheco and Drogaria So Paulo stroke back merging their operations and
creating an almost 700 stores, R$ 4.4 billion (US$ 2.59 billion) group that leads the drugstore segment.
Pacheco will own a majority position, but the new company board will be evenly shared. Both brands
will continue to be in the market.
Brazilian Retail News
Year 11 - Issue # 403 - So Paulo, September, 05
th
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 2
29/08/2011
The consolidation in the Brazilian drugstore retailing shall continue in the near future, as British
Boots has shown it intends to invest in the country. Company representatives were in Brazil recently
asking for market information and also evaluating possible partnerships or acquisitions, said Folha
de S.Paulo newspaper.
Warren Buffett to invest in Brazilian retailing
Warren Buffetts Berkshire Hathaway has been purchasing stocks of Brasil Foods in So Paulo and
New York stock exchanges, aiming to, in the hort term, become one of the companys top shareholders.
This is only the tip of a much more ambitious plan, as Berkshire wants to purchase expressive shares
in Brazilian companies, not only in the food industry, but also in retailing, healthcare and IT.
Magazine Luiza and Renner interested in Leader chain
Relatrio Reservado news bulletin says
Magazine Luiza, Brazils 3rd largest electronics
chain, is a runner up to purchase R$ 1 billion sales
department store chain Leader. The company,
however, is expected to face tough competition,
as Renner department store chain has renewed
interest in Leader, who it almost purchased in
2008, a deal was cancelled in the wake of the
global fnancial crisis.
British Boots mulls Brazilian venture
Dia discount group advancing in master franchising deal
Discount chain Dia, recently spun-off from Carrefour, said a deal with a Brazilian master franchisee
is getting closer and may be reached by the end of the year. Today the chain runs more than 360
stores in So Paulo state and with the franchising deal it plans to grow much faster.
Walmart recycles 20,000 tonnes of waste in Brazil
In the frst half of the year, Walmart, Brazils
number three supermarketer, stopped sending
to landflls 56% of the solid waste generate by its
stores, or more than 20,000 tonnes of recycled
waste. The retailer expects to reduce by 60% the
volume of waste sent to landflls, by increasing the
number of stores with over 90% of waste recycled
(today, there are 15 stores in this condition).
Brazilian Retail News
Year 11 - Issue # 403 - So Paulo, September, 05
th
, 2011
Phone: (5511) 3405-6666
BRAZILIAN RETAIL NEWS 3
29/08/2011
Pets, a rising market
Marcos Gouva de Souza (mgsouza@gsmd.com.br), CEO, GS&MD Gouva de Souza
Momentum
Good not only for dogs, but also for cats, birds, some reptiles, exotic birds and other pets. In Brazil, the pet
market shall end this year with total sales over R$ 11.3 billion (US$ 6.65 billion), in an infation-adjusted growth
of 4.5%, in a conservative forecast. In 2010 this market saw its sales rise by 8.5% over 2009. And it all points to
the fact it will continue to rise above the countrys GDP in the next years.
The main reasons for the growth of this segment, with around 25,000 pet shops in the country, are the countrys
economic growth; the evolution of the families spending patterns; and, mainly, the expansion and professionalism
of the product and service offer, in specialized stores, vet clinics, supermarkets, hypermarkets, cash & carry and
internet.
These were some of the fgures and issues debated during the 1st Pet Brasil Forum, last week in So Paulo.
The seminar presented a deep and broad picture of the segment and was supported by a GS&MD Gouva de
Souza research with all the agents working in this market, debated by retailers and suppliers.
There was some common ground, as the perception of the continuity of the growth of the segment; the evolution
of the digital channels complementing the brick-and-mortar ones; the inevitable consolidation that will occur
alongside the organic expansion; the increasing share of services in the total segment sales; the continuity of
the sectors professionalization and formalization; the ongoing segmentation of brands and products; the growing
presence of large retailers in the segment, with more and more space in stores dedicated to these goods; and
the broader mix offered to customers.
It all following an also common ground perception that the population to be served has been growing, with an
increasing share of cats, although dogs are still majority.
The big store unconsolidation all over the country and the growth reported in the last years point to a natural
consolidation process, once the larger chains own an estimated 4%-6% of the total market, way below other retail
segments. In the next years there shall be an acceleration of the consolidation process, due to organic expansion
of the larger players and also due to the creation of buying groups and franchising chains.
Another relevant aspect is the likely growth of the internet as a shopping alternative, in a move driven by
consumers, specially in the larger cities, as a complement for the brick-and-mortar stores, as detected in the
research that stressed the positive perception consumers have about the internet channel.
In the offer side, its worthy to notice the expansion, diversifcation and segmentation of products offered by
global and national brands, answering to this natural evolution of consumers behavior, looking for goods that ft
better their different realities and shopping moments.
The same way, it stands out the increasing service offer in this segment, in an increasingly sophisticated way:
pet insurances, clinics who differentiate in the services provided; and other options aiming to leverage spending.
This is another segment that has been passing through and will continue experiencing deep structural changes,
due to the upgrade in the populations spending patterns, as a consequence of the changes the market has been
living. The constant monitoring of the segment will make possible to identify shopping patterns that will help in
the development and maturement of the segment.
Brazilian Retail News (BRN) is a weekly newsletter published by GS&MD - Gouva de Souza with the most important news
on the Brazilian retailing. The content can be freely used, once the source is quoted. If you want any information on BRN or our
services, please send an email to publicacoes@gsmd.com.br or access GS&MD - Gouva de Souza at www.gsmd.com.br.
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Av. Paulista, 171 - 10 foor
Paraso So Paulo Brazil Zip Code: 01311-904
Phone: (5511) 3405-6666 Fax: (5511) 3263-0066