The World Economic Forum checked out of snowy Davos divided on helping the US and Europe. In tropical Brazil meanwhile, millions of citizens are shucking the pathology of underdevelopment. Central bank statistics indicate the world's 10th largest economy posted 5.6% growth last year, creating 1.9 million new jobs. Big box giants trust Brazil's economy and are spending billions to woo new customers.
Wal-Mart offers perks in key markets that include free delivery, cut-to-order meats and fresh organic produce associated with brie and chablis chains like Gelson's in Pacific Palisades and Dean and DeLuca in Manhattan. Reuters reported Wal-Mart's 300 plus stores in Brazil are growing twice as fast as the company's US operation.
Big box shopping, with its aircraft carrier size array of food, consumer electronics, clothing and home furnishings has become a national social phenomenon in Brazil, rivaling futebol and samba... one reason why more households in Brazil purchased PCs than TVs last year.
The battle is also a test of how global business cultures listen to and interact with emerging markets. Top dog Pao de Acucar and second place french-owned Carrefour focus mainly on reinforcing their traditional middle class base. Wal-Mart at number three is growing with a hometown proud marketing strategy that empowers low income Brazilians. Why Brazil's economy can take it to the hoop during hard times remains an enigma to stateside analysts who continue to associate the concepts of central planning and coordination with "evil empire" scenarios fostered by "Reagan revolution" propagandists. Brazil has remained relatively stable thanks to a modicum of central strategy packaged in a neoconservative wrapper. While government and business often operate as partners, a technocratic state superstructure monitors free marketeers so they don't run unbridled over the economy like they just did in the United States.
Brazil learned the perils of cowboy capitalism the hard way during the 1980s debt crisis. Under Ronald Reagan's watch US banks earned huge commissions loaning recycled petrodollars to Brazil and other cash strapped Latin nations transitioning from military dictatorships to democracy. When the easy money ran out inflation, unemployment and political instability set in. Brazil and its neighbors went through hard times a lot tougher than what the US faces today.
When Wal-Mart put a billion dollars on the table last August in an expansion move creating 9,000 jobs their Americas chief Craig Herkert met directly with president Inacio Luis "Lula" da Silva to review the deal. Brazil also has a strategic planning minister, Roberto Unger, who monitors the dashboard of national life and recommends adjustments when necessary. A Harvard professor who went home to serve his native Brazil, Unger might have a friend in Washington... a former student named president Barack Obama.
The gamebreaker that could slingshot Wal-Mart to the top is their ability to link brand and work force with a commitment to sustainability in Brazil. Employees wear t-shirts with messages about recycling and the environment. Inexpensive cotton tote bags emblazoned with green slogans are offered at check out counters as an alternative to plastic. And while the big box giants use all use Brazil's strong internet backbone to reach out to customers, Wal-Mart's experience building customer relationships with interactive, easy-to-use websites are more attractive to GenXers and Millennials who are the future of the nation's consumer base. While most analysts agree that spillover from the northern crisis will dampen growth, increased trade with China, India and Russia should help Brazil's economy expand about 2.5 percent this year. To cover their bets, big boxes are expanding into the highly profitable consumer credit sector, aggressively cross-marketing with banks. No credit, no problem. In-store reps can sign you up or increase your line on-the-spot.
Unlike the United States, where the full price on big ticket items is displayed in large numbers the focus in Brazil is on how much the consumer pays each month. As the big box battle heats up Brazilians need to ask themselves how much longer always the low price will offer always the high interest rate.