Brazil is leading emerging market

Brazil’s demand for fashion and luxury have made it the most interesting of the emerging markets. Being the world's fifth most densely populated country means a market many brands have yet to tap into. In a new index commissioned by consulting firm A.T. Kearney, Brazil came out as the leading emerging market ahead of China and India. The Retail Apparel Index was published for the first time this year as a companion to A.T. Kearney’s Global Retail Development Index (GRDI), a study of retail investment attractiveness among 30 emerging markets conducted annually since 2001.

“There is great potential for global apparel retailers to succeed in Brazil,” said Hana Ben-Shabat, a partner with A.T. Kearney. “Brazil is the most attractive apparel market for reasons of demographics and demand.” Brazil’s clothing market is growing at more than 7 percent annually and is estimated at $37.2 billion. The country is young, with more than 60 percent of population below the age of 29, and its consumers spend $402 annually on apparel — six times more than the average Chinese consumer. Brazilian consumers use credit for apparel purchases far more frequently than in other emerging markets. In addition, small, local retailers make up more than 60 percent of a highly fragmented domestic retail apparel market.

China and India closely trail Brazil in the Apparel Retail Index. Both countries have significant potential to increase the average spend per capita on clothing as prosperity continues to rise.

At $84 billion, China’s apparel market is the world’s third largest and organized apparel retail accounts for just 17 percent of it. Average monthly apparel spend is $45 to $90, which is significantly lower than most other countries. However, an affluent middle class that regularly buys mid- to high-end apparel is emerging in urban areas. These consumers buy up to three mid-to-high end pieces every year for special occasions, such as Chinese New Year, weddings and important meetings.

The top seven apparel companies account for less than 10 percent of the total apparel retail market in India and Indian consumers tend to be more loyal to a specific retailer than to an apparel brand. The result is a thriving private label apparel market.

“Like many developed countries, apparel retail in India is driven by sales promotion, with end of season sales, special events and frequent promotions utilized,” said Ben-Shabat. “This behavior presents a challenge to retailers who are used to building their ranges and sales plans around a few key seasons and will now have to think more creatively about adjusting their merchandise plan to the local market.”

Image: Brazilian flag