According to AT Kearney’s 2011 Global Retail Development Index, Brazil now ranks as the most attractive of 30 emerging market countries for retailers, knocking China off the top spot.
That’s not bad considering Brazil was so unattractive in 2004 it didn’t even make it on to the management consultant’s list.
“The past eight years of center-left government has resulted in a staggering 40 percent increase in GDP per capita, and a growing and more affluent middle class has resulted in increased consumption,” AT Kearney said.
“Most investors view Brazil as a relatively stable market compared to other developing economies, with a pro-business government that welcomes foreign investment.”
That optimism seems to be shared by the industry itself. Household appliance retailer Magazine Luiza, shoe store chain Arrezo, and drugstore Droga Raia have all held IPOs in the past six months.
Thirty new shopping centres are expected to open next year in Brazil, after 25 openings this year.
But for all the excitement and promise of Brazil, few global brands have yet managed to make a big impact on the country.
In São Paulo’s shopping centres, for example, Spanish clothing retailer Zara enjoys a near monopoly over non-Brazilian women’s clothing.
High import taxes, bureaucracy and complex labour laws mean the reality of doing business for foreigners in Brazil is not always so attractive.
While the country is no. 1 for its retail potential, it’s worth remembering that the World Bank’s Doing Business Index ranks the country below Yemen, Rwanda and Russia in 127th place.