Global Retailers Battle for Big Box Brazil

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.

Comments

[bibibuzios]

Brazil has some of the highest credit card rates in the world because we want to keep inflation in check. Prices for laptops are very high and the temptation to buy on credit is great. But the cash price is a lot less. In our richest state, Sao Paulo, there is a new program where techers can buy laptops through the government, but once again, with the time payments it is more expensive than up front cash. Why can't these big stores make computers affordable for a nation that is starving for them?

[carrieanna]

Uggg, I hate to see fellow Americans sell out their souls to Walmart.

[Rollingstoner]

Your basic Jeff Foxworthy fan just don't have a very good understanding of Brazil. And they ought to, because the US and Brazil are friends and allies. Hard working people with strong family values deserve a shot at getting a piece of the rock. Brazil's agricultural strip in the nation was developed by about 50,000 refugees from the War between the States who are to this day known as Americanos and their home base is a city called Americana. There are lots of folks with names like Washington and Jefferson in Brazil And the flag of the biggest state, San Paulo, is modeled after the stars and stripes. If they can succeed at being an economy that creates a way out of poverty like the US used to be more power to 'em.

[Mundialista]

This article does not address the issue of whether big box is good, or bad. But that Brazil is coming of age, moving away from the pathology of underdevelopment inherent int an inter-American system crafted by the North. Sustainability is a side issue here. Keep lowering the bar of expectations and you have yourself to blame for giving the world a flat affect. Nobody stopped Bush, Cheney and Palin from drilling in the the Alaska wildlife reserve. Split the difference.

[Froggybottom]

Good credible analysis. BBC is reporting that Brazil's econony is the least impacted by the northern economic crisis among the world's 35 largest economies. http://www.bbc.co.uk/portuguese/reporterbbc/story/2009/01/090112_brasilocdeml.shtml One needs to take pause when US and some Brazilian media attempt to create negative news and pain picture that Brazil and other Latin economies are obliged to "feel the pain"

[JScott]

Sorry despite WM propoganda about being sustainable, the big box approach will reach it's limits just like in this country. Besides how are they stopping the destruction of the Amazon-----oh that's right they AREN'T!

[RedneckDem]

Here's the end product of "globalization"- the willful disintegration of thousands of years of culture. For what you ask? So every main street in every country in the world can have chain stores and chain restaurants. And then in a decade or so, when they realize that this really is no Eden, they can't remember the last time they spoke with their families, divorce rates are skyrocketing and their environment is in tatters they will have their WTF moment...

Everywhere these giant corps go destruction follows, whether it be good paying jobs, family or the land itself.

[AgnesBankhead]

' Why Brazil's economy can take it to the hoop during hard times remains an enigma to stateside analysts ......... '

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in Brazil, a large percentage of cars run on fuel made from sugar cane, a fast-growing and highly sustainable crop

it should be little wonder to anyone that without the Middle East Monkey on its' back, Brazil's economy is bound to excel in difficult times