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Brazil is the largest retail market in Latin America, with a high level of urbanization and strong mobile and internet adoption. However, the pandemic and its economic fallout have dampened income growth, causing Brazil’s middle class to shrink and slowing the pace of retail growth. The share of households earning more than $10,000 per year fell to 46% in 2020, from 60% in 2019, but improved to 49% in 2021. Inflation is high, and the global economy is rapidly deteriorating, which will weigh on Brazil’s economy in the remaining months of 2022 and in 2023.
The outcome of the October 2022 presidential election and the continuation of the government’s cash transfer program will affect the consumer goods and retail sector. A weaker domestic economy and more stubborn inflation pose downside risks to the outlook. Brazil’s retail sector is relatively fragmented, with leading sellers including Carrefour and Casino. There may be further consolidation in the coming years, reflecting the need for investment in digitalization and logistics.
Online sales have surged dramatically amid the pandemic, with about 105 million Brazilians now shopping online. Regional players such as Mercado Livre, Lojas Americanas, and OLX dominate online shopping, but Amazon is keen to expand its presence and has been investing in infrastructure in the country. Online sales growth in nominal local-currency terms will accelerate over the next five years, reflecting low penetration, although the pace will be slower than in 2020-21.
The retail industry in Brazil is made up of many different companies with no one dominating the market. Some of the major players include Carrefour and Casino from France, Cencosud from Chile, Grupo BIG, Lojas Americanas, Mercado Libre from Argentina, Makro from the Netherlands, and Via Varejo. In the non-food sector, companies based in Brazil, such as Lojas Americanas, Via Varejo, Magazine Luiza, and RaiaDrogasil, are the main players.
When it comes to the e-commerce market in Brazil, there are three main companies that dominate the market: Mercado Livre, Lojas Americanas and OLX from Netherlands. The fourth largest player in the market may vary depending on the source, with Shopee being considered the fourth largest according to Euromonitor and Amazon being considered the fourth largest according to Ebanx, a Brazilian payments firm.
Atacarejos in Brazil: In 2021, atacarejos (warehouse clubs) in Brazil recorded one of the highest sales growth rates among store-based retail channels according to Euromonitor. This format has seen strong growth since the mid-2010s, as consumers have turned to it for lower-priced offerings and small businesses, such as independent food service providers and traditional grocery retailers, have favored it in times of economic recovery. With the lifting of COVID-19 restrictions, atacarejos have benefited from the optimism of small businesses that resumed their activities and sought out suppliers.
Conscious Shopping in Brazil As concerns over conscious shopping grow, some consumers in Brazil may begin to prioritize direct channels over marketplaces like Amazon, Magazine Luiza, and Mercado Livre. After a year of financial support for businesses they believe in, some consumers may view the experience of big marketplaces as detrimental to brands. These conscious consumers may be more likely to visit the brands’ own websites, giving the brands an opportunity to regain control rather than relying on marketplace platforms. However, this decision may result in less competitive prices and shipping costs for the consumer.
Service Integration & Consolidation: Brazilian retailers are shifting their strategies away from separating digital operations from store-based ones. This trend is seen among both large retail chains and small, independent players in response to the growth of e-commerce marketplaces in Brazil such as Mercado Livre and Shopee. These marketplaces play a key role in sustaining the sales of small retailers by providing an accessible ecosystem for them to join the digital sphere of commerce. Shopee has been successful in appealing to consumers looking for online bargains, while Mercado Livre aims to become a digital hub for popular brands and other retailers. The e-commerce market in Brazil is likely to see a consolidation trend over the next five years, diluted in the large networks of third-party marketplaces. Additionally, retailers are turning to financial products such as digital wallets and cryptocurrencies to generate revenue. However, the high number of digital wallets present in the market may make it difficult for players to retain customers in the long run.
In Brazil, There are about 27% of people use credit cards, and 59.3% of people use debit cards. While there are 14.2% of people purchase on the internet, there is only 12.9% of people with online banking accounts.
For E-Commerce Customers in BrazilWhat are the major driving factors to purchasing online?
There is 114.7 million consumer goods e-commerce users in Brazil, and they spend total of around 40.01 billion USD dollars in 2021. That makes a per capita spending on consumer goods e-commerce of around 349 USD. Also, in those e-commerce users, about 46.5% of them purchase through their mobile phone.
Our consumer research practice tracks what customers spend and how they make decisions across major economies in the world.
