Results Count ... everything else is conversation.: Brazil – Retail lessons from the land of beef

Rapid sales growth can cover retail “sins” of omission

While in much of the world economies and retail are still in recovery mode, Brazil is a bull of an economy. Brazil is bold, brazen and the land of where “beef is truly what’s for dinner”. Brazil has the highest GDP for Latin America, and now ranks in the top economies globally. So, what does retail look like in a booming economy? The Retail U Professor returns with insights, retail snapshots and glowing stories of "picanha"!

A taste of Brazil from a Sao Paulo point of view

I recently had an opportunity to take Retail University to Sao Paulo, Brazil. It’s tough to assess a country as vast as Brazil from visiting just one city. It would be like a Brazilian assessing China by visiting Shanghai, or characterizing the US by visiting just New York City. Still, a visit to the bustling sprawl of modern Sao Paulo is symbolic of the economic landscape of Brazil as a whole. And, a taste of Brazil firsthand is better than no taste at all … especially when it comes to the food!

The Octavio Frias de Oliveira Bridge is a symbol of Sao Paulo’s modern architecture … and traffic!

Who knew that Sao Paulo is metropolis of 20+ million people and one of the largest cities in the world? Most westerners, like me, tend to work in Western Europe or China, and miss Brazil. Sao Paulo is literally the “hub” for most everything in Brazil. It has all of the major forms of retail, from the big box hypermarkets, to the smallest of shops in IT Malls. As it turns out, Sao Paulo might offer the most representative cross section of Brazil in terms of its future, and the future of retail.

What’s different about Brazilian retailing?

The answer to what makes Brazilian retail unique is probably not much, at least in terms of channels and store types. My observations are offered with the utmost respect to Brazilian retailers, who are as good as any merchants worldwide. In fact, most of the well-known brands and many international retailers are present in Brazil.

In metro areas like Sao Paulo, retailing is extremely well developed. Carrefour has been in Brazil for over 15 years. It’s also easy to find Walmart, Sam’s and Costco, as well as number of large DIY home products retailers. With Brazil’s developed logistics and distribution, organized retailers with larger chains of stores are much more like the US, than India or China. Yet as a paradox, there are also very small, single shops in IT Malls that you don’t see in the US.

Rapid sales growth covers many retail “sins”

Perhaps, the greatest retailer challenge is Brazil’s current economic success. What US or Western retailer wouldn’t like to have these “challenges”:

Growing consumer traffic
Increasing household purchasing power
Significant year over year sales growth

Retailing is never a “slam dunk”. It has to be one of the most challenging businesses on this planet. But, retailing is much easier when there is year over year annual growth, largely fueled by economic purchasing power increasing demand. In the case of the tech sector, Brazilian IT stores are still catching up with the increasing demand for computers, tablets and smartphones. Brazil will be third in PC sales trailing just the US and China.

And, here in lies perhaps the greatest retail challenge for Brazil – complacency. When sales revenue grows year over year, there is no burning platform creating urgency for change.

Consumer experience counts when demand flattens

In a high sales growth market, it is fairly easy to stock the shelves and let them come to the store to buy. To be fair, there appears to be some well trained staff and “tech benches” in technology stores. In my report back from the Ukraine, I made the observation that the PC aisles looked like merchandising “racks of meat". In the meat obsessed country of Brazil, the meat merchandising metaphor is even more appropriate.

Brazil's tech retailers are staffed by OEM trained reps, but with little opportunity for the consumer to experience much on a PC.

Most of the PC aisles in Brazil look essentially like rows of commodities.

The units are closely spaced as much as possible
PCs are not turned on, or only displaying store advertising
The PC aisles are product centric, not consumer focused

Apple excels consumer experience worldwide …

What struck me about the experience in Brazilian IT stores is how amazingly consistent Apple is worldwide. It doesn’t matter if it’s Shanghai, Athens, London, Kiev or Sao Paulo. If there is an Apple store within a store, it looks and feels the same. More importantly, the computers and devices are turned on, all kinds of content is loaded, and people are present and engaged to show you how you can use the device the way you want to use it.

Classic Apple table within tech store surrounded by consumers engaged with hands and heads down experience.

It simply amazed me how Brazilian retailers can have an Apple area that is alive and engaging consumers in a hands on experience … and a few meters away are dead PCs. Likewise, consumers are in the gaming aisles actively experiencing games firsthand, but the PC aisle has rows of “dumb” monitors flashing ads … if they are turned on at all.

Differentiate or … be severely challenged!

Throughout the course of Retail University we ask participants to give us their sound bites of what they think is most important for their country. In the case of Brazil, one of the most popular was our favorite: Results Count … everything else is conversation. But, what was interesting is that the Brazilians noted that the results that count will no longer just be sales revenue growth. There must also be consumer engagement and satisfaction to achieve profitability as competition increases.

The other Brazilian sound bite about retail: Differentiate or Die! With the rapid growth of ecommerce in Brazil, the handwriting is on the wall. There is a need to differentiate the experience in store if retailers are to survive beyond selling more features at the lowest price.

A lesson from Brazilian beef retailers extraordinaire

One of my great joys in traveling abroad is experiencing the culture and the food. While I had been told many stories about dining in Brazil, no one is quite prepared, where multiple meats are typical for dinner. And, no one in the world takes their meat more seriously than Brazil!

On many menus, there was not just Brazilian beef, but specialty beef from Argentina and other countries. But, what struck me most is the specialty cuts and preparation. Only in Brazil will you find “picanha”.

Brazilian tech retailers would do well to take a lesson from the restaurateurs … who clearly have learned how to differentiate via products like picanha (a special flavor cut of beef unique to Brazil) and dining experiences like gaucho preparation and serving!

The 3 best Brazilian sound bites from eating about it:

If you are not moving forward, you’ll get run over
Sometimes the best innovation is in our own backyard
To improve, you have to step outside of your “box”, and see it through your consumer’s eyes.

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