test rrg slideshare example
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Riedel Research Group - Outlook on Brazil Retail IndustryThemes, Opportunities, Challenges and Investment Ideas
David Riedel President and Founder Riedel Research Group LLC
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Outlook on Brazil Retail IndustryBrazil’s Retail Competitive Outlook
Main Players
Regional Challenge
New Entrants
Attractive Segments
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Outlook on Brazil Retail IndustryBrazil’s Retail Recent Success - Total Revenues in R$ Billions
Retail Sector Total Revenues (2000-2006)
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Outlook on Brazil Retail IndustryBrazil’s Retail Recent Success Factors
• Increase of Salaries (C and D Classes)
• Decrease in Interest Rates and Increase in Consumer Credit Volume
• Increase in Credit Terms (Days)
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Outlook on Brazil Retail IndustryBrazil’s Retail Success Factors - Increase in Salary Wages (base 2002=100)
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Outlook on Brazil Retail IndustryBrazil’s Retail Recent Success Factors - Interest Rates and Credit Volume
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Outlook on Brazil Retail IndustryBrazil’s Retail Recent Success Factors - Increased Terms for Personal Credit
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Average Terms of Personal Credit (Days)
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Outlook on Brazil Retail IndustryKey to Retail Success is Attracting the Growing Spending from C and D Segments
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Outlook on Brazil Retail IndustryBrazil’s Retail Consumer: Shopping Preferences vs. BRIC Countries
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Source:How Half the World Shops (2006)
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Outlook on Brazil Retail IndustryRetail Electronics and Home Appliances present highest growth and potential Annual Average Growth (2002-
2006)
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*%
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Retail Sales for Electronics
and Home Appliances
GDP
Retail Sales for Clothes and Food
• Retail Electronics outpaced the Market Growth in recent years
• Many Retailers are specialized in the segment
• More national consolidation is expected
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Outlook on Brazil Retail IndustryBrazil’s Retail Main Challenges
• GDP growth and Interest Rate decrease play a great part of the
recent growth in the sector. Aggressive Expansion Plans can greatly
suffer from changes in this parameters
• Heavy Regionalization of the Retail sector remains an obstacle for
increased economies of scale
• Local consumer habits can be a hurdle for new entrants in the North
East region (where the biggest growth is expected)
• Increased competition in the Sao Paulo area can cut margins for all
players (where the biggest volume is concentrated).
• New entrants with differentiated formats and value propositions to
the client can obtain significant market share from current players
(particularly in the areas of highest expected growth)
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Outlook on Brazil Retail IndustryConclusions: Attractive Market with Potential Challenges in the Mid-term
• Expected GDP growth will continue benefiting the whole sector, as many more potential customers (segments C and D) are likely to increase their consumption significantly (especial if credit terms continue to improve).
• Increased Investments of Major Players will tighten competition (both in the North East and South East regions)
• More consolidation on the industry is expected (through acquisition of smaller players with good brand recognition in their regions)
• Some product segments (as electronics and home appliances) are expected to outgrow the sector, triggered by the increased consumption of the massive C and D classes
• New Entrants (like Chilean Cencosud or Falabella) will likely incorporate new formats to the industry
• The main challenge will be the pressure margins on the more mature markets of South East region (mainly Sao Paulo)