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“Luxury in Brazil is at a standstill”

Marie Naudascher

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“Luxury in Brazil is at a standstill”

Luxe Packaging Insight spoke with André D'Angelo, a luxury-goods consultant in Brazil and author of Need, Don’t Need: Brazilian Marketing & Behavior in the Luxury Market, on the state of luxury in the country.

How has Brazil’s luxury market been faring since the beginning of the pandemic?

Like the overall economy in Brazil, for the past five years luxury has been at a standstill; we are not seeing new consumers taking an interest in the sector. In the context of the current pandemic, some luxury players are doing better than others. German carmaker Porsche, for example, has seen its sales increase by 117% since the beginning of the year, but this is an exception in what is a crippled automobile sector. Mid-range luxury, such as ready-to-wear, leather goods and jewelry is heavily dependent on the middle class, which is no longer traveling. Accessible luxury, meanwhile, such as perfumery and cosmetics, it is very much linked to retail.

Are luxury brands coming up with creative ways of reaching their consumers?

It depends on the quality of customer relations and the brand's ability to anticipate its clients' needs. Some car brands are offering test-drives, while fashion boutiques can do fittings at home. But the luxury clientele is not being renewed. This health crisis means that consumers aren't able to purchase imported brands as the supply chain is basically on hold and there are no 100% Brazilian luxury brands that could take their place.

In terms of messaging, I think that brands could look to position luxury as an escape from an anxiety-ridden reality, but I haven't seen this kind of campaign thus far. It appears that companies are also going to consolidate (or in some cases create) an image of social responsibility as today the majority of the population is in a very fragile state.

How will the luxury market evolve?

Instead of a V or W-shaped recovery, I believe that it will happen over a long period of time, so more of a U-shaped recovery. This scenario would require both a drastic reduction in the number of cases of Covid-19 (Editor's note: 207,000 cases and 14,131 deaths were reported as of mid May) and a large-scale vaccine. For at least a year, manufacturers will have to hold on as consumer habits do not change overnight.

For Mother's Day (May 10), brands tried to go all-digital, whereas normally Brazilians like to shop in malls. The second most important date is Valentine's Day, but it mobilizes young people who still have low purchasing power. These consumers are more what I call “excursionist”: they invest in services (restaurants, travel...) rather than luxury goods.

Is this a temporary crisis or something more lasting?

The Brazilian association of shopping centers (Abrasce) counted 500 million visitors in the country's 577 malls in 2019. This month, we are approaching zero, as all of these centers closed in March. Some have reopened, but the 182 shopping centers in São Paulo, the epicenter of the pandemic, remain shuttered. According to Glauco Humain, president of Abrasce, in order to avoid layoffs, shop rents must be renegotiated as the amount of vacant space this year is likely to triple.

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