Brazil: Distributing a product

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Distribution

Types of Outlet

Supermarkets and hypermarkets: Retail
Carrefour, Pao de Açucar, WalMart (national coverage). Cencosud, Supermercados BH, Irmaos Muffato, SDB Comercio, Condor, Sonda (regional coverage). Represent almost 37,000 all over the country.
Markets: Wholesale, retail-wholesale, retail
Mostly fresh products for the majority of Brazilian households; exist in towns and especially in rural areas.
Shops and grocery stores: Retail
Small shops make up a network of more or less formal distribution in rural areas and in the popular districts of towns, selling vital commodities (almost 52,000 all over the country).

Evolution of the Retail Sector

Growth and Regulation: According to USDA Foreign Agricultural Service latest report, in 2020, the food processing industry registered annual sales of R$789 billion (US$153 billion). Food represented 81% and beverages 19% of total sales. The Brazilian Supermarket Association (ABRAS) reported supermarket revenues of R$554 billion (US$107 billion) in 2020, representing 7.5% of the country’s GDP. The food retail industry sales has recorded a constantly growing trend in recent years, despite the country's uncertain economic climate.

Brazilian consumers have changed their purchasing habits: decreasing brand loyalty during the recession period and abandoning more expensive habits. Shifting demand went from premium brands – the majority is imported – to more affordable products. As consumers are not willing to pay higher prices, retailers have changed the selection of products. Within the imported categories, retailers kept well-known brands and changed the mix of products, opting for less expensive items. Supermarkets are the most important segment for imported food and beverage products. This format presents more diversity, which is the most important characteristic to affluent consumers, behind proximity. Penetration of foreign goods is considerably higher in supermarkets, ranging from 30-60%.
Although the Brazilian retailing market is not considered concentrated, the top five Brazilian companies represent 31% market share (USDA, 2020).
Among the top Brazilian retailers there are Carrefour, Grupo Pao de Acucar, Walmart (Grupo Big), Cencosud, Grupo Muffato, SDB Alimentos, Supermercados BH, Companhia Zaffari and DMA distribuidora.
Market share: According to latest data provided by ABRAS (Brazilian Association of Retail Stores), in 2020 the Brazilian retail market was composed of 91,351 retailer operators. The stores were divided into five categories: convenience, neighborhood stores, supermarkets, hypermarkets, and wholesale clubs. Hypermarkets and supermarkets are the most widespread. The top 50 retailers accounted for almost 52% of overall sales in 2020, reinforcing the concentration of the market. Supermarket purchasing accounts for almost 80% of the total self-service grocery stores in the country.
In 2020, the market was divided as follows:
•    Carrefour: 13.5% market shares (Carrefour Mercado, Carrefour Bairro, Carrefour Express, Supeco, Atacadão).
•    Assai: 7.1%
•    GPA: 5.6% market shares (Pão de Açucar, Minuto Pão de Açucar, Extra, Mini Mercado, Assai)
•    Grupo Mateus: 2.6%
•    Cencosud: 1.7% market shares (G.Barbosa, Perini, Mercantil, Bretas, Presunic)
•    Irmaos Muffato: 1.6% market shares (Super Muffato, Muffato Max)
•    Supermercados BH: 1.6% market shares
•    SDB Comercio: 1.5% market shares
•    Companhia Zaffari: 1.1% market shares
•    DMA Distribuidora: 1.0% market shares
Retail Sector Organisations: Brazilian Supermarket Association (Abrasnet)

E-commerce

Internet access: With a population of over 200 million people, Brazil is the 5th most populous country in the world and the largest internet market in Latin America. As of 2017, Brazil is the fourth largest internet market worldwide, with a user base of 139.111.185 people, placing penetration around 66%. The number of smartphone users in Brazil is estimated to reach 84.24 million by the end of 2018. Monthly internet usage in Brazil amounted to 25.7 hours per user in 2016. In comparison, the Latin American average is 18.6 hours. The most popular search engines in the country are Google, Bing, Yahoo!, DuckDuckGo and Baidu. Google is by far the most popular and accounted for 96.98% market share, followed by Bing with 1.61%. Google is the most dominant search engine in the Latin American online search market, with a desktop search market share of over 92% in several leading markets in the region.
E-commerce market: Brazilian e-Commerce ended 2017 with US$18 billion in earnings, a number that has been increasing over the past few years and is expected to reach US$ 23 billion by 2021. With a predicted online retail growth of 12% in 2018, Brazil continues to be an outstanding opportunity for online retailers in Latin America and the world. Mobile commerce continues to be one of the strongest trends for the coming years. Consumers are learning to compare prices and product information via the internet and often prefer the convenience of purchasing items via e-Commerce. The rise in sales of mobile devices (2%), compared to the decrease in sales of notebooks (30%) and desktops (37%) demonstrates a change in people’s lifestyle and buying habits. Mobile devices were used for 27.3% of e-commerce purchases according to Ebit and up to 31% according to Atlas and ABComm, a significant growth in comparison to 2016, when its share was 22%. However, when it comes to completing an online purchase desktop is still the most popular device. According to the e-Commerce Foundation, 25% of people use their smartphones to look for information on a particular product every week, while 12% do that on their computers. Additionally, 6% of people use their smartphone to purchase goods on a weekly basis and 3% of them use their computers to make the purchases.
Social media: In 2013, the Wall Street Journal bestowed Brazil with the title of “Social Media Capital of the Universe”. Brazilian users are among the world's most engaged, spending an increasing amount of time on social media (in 2017, the daily average spent on social media was 3 hours 43 minutes). Facebook and WhatsApp are the leading social networks in the country, followed by Facebook Messenger, Instagram and Twitter. According to a report by We Are Social, as of 2017 122 million people in Brazil are active on social media, which accounts for 87.7% of all internet users in the country. Of them, over 100 million are active on a daily basis. The number of social media users is up 18% since January of 2016, so it is clear that social media is a rapidly-growing sector in Brazil. Brazil has the third largest Facebook user base in the world, after India and the US, and they have the third highest number of Google+ users worldwide. Almost 18 million people use Twitter, making it their sixth highest user base.
Around 63% of online shoppers receive and search recommendation through social media before making any purchase, according to the Brazilian Ecommerce Association. More than 60% of companies in Brazil invest in a paid advertising strategy, with the intent of raising brand visibility and increasing sales. Of this percentage, 98.5 % of businesses invest their money in Facebook Ads, which, being less expensive than Google AdWords, is a great option for small to medium sized brands who want short-term results with a low budget.

Distance selling

Evolution of the Sector: According to the World Federation of Direct Selling Associations (WFDSA), 2016 retail direct sales in Brazil decreased slightly to USD 8,689 million (a 0.1% decreased compared to 2015). Despite this, independent representatives in the industry reached 4,335,834 people. According to Euromonitor International, direct selling remained relevant in 2017 due to increased unemployment in other sectors generating an influx of new direct sales representatives. Fabio Piastrelli, founder of Gera (IT solutions for direct sellers), claims Brazil has nearly 200 direct selling companies that will maintain direct selling's relevance in the country.

Brazilians value a well-groomed appearance which, combined with person-to-person experience, makes personal care products the leading direct selling sector. Major players include Natura, Avon, and Luxor Cosmetics, although they face increased competition from cosmetics company Hinode. In fact, Hinode has revolutionized the industry by offering strong direct selling training, jumping from 35,000 to 600,000 representatives and 600% revenue growth from 2012 to late 2016. As a response, many direct selling companies are diversifying their sales efforts into the Internet to make up for decreasing demand.

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