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The More for Less Emerging Consumer
Alberto Serrentino
Senior Partner
Scenario
Scenario
Declining unemployment rates
+ Increase in household income, mass wage and
purchasing power
+ High confidence level
+ Credit expansion
+ Consumption and retail sales growth
= Massive demographic shift
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The emerging middle class phenomenon
2003 2012
Wealthy
A1 1
0.5
Upper A2 5 4
middle class 10
B1 9
B2 14
21.7
Enlarged
emerging
middle class* C 36
50% 48.8
70,5%
Poor D 31
14.2
Extremely
poor E 4 0.7
Source: Target 2012 / GS&MD analysis
The More for Less
Emerging Consumers
The More for Less emerging consumers
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The More for Less Consumer Survey - 2012
320 personal interviews with Brazilian consumers
who moved upwards in the SEG in the last 5 years
The More for Less emerging consumers
They are optimistic (86%)...
Source: GS&MD Research “The emerging middle class consumers”, 2012
The More for Less emerging consumers
…their life standards improved in
the last 5 years (73%) and they
believe they will keep improving
over the next 2 years
Source: GS&MD Research “The emerging middle class consumers”, 2012
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The More for Less emerging consumers
…they compare prices (66%)
primarily in physical stores
(63%)…
Source: GS&MD Research “The emerging middle class consumers”, 2012
• 825 stores in Latin America
• Sales 2011: US$ 15.6 bn
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183 stores
in Brazil
HYPERCASH FORMAT
Hybrid model: cash &
carry + discount
retailing
+28% avg sales/sq-ft
compared to
supermarkets
+19% avg sales/sq-ft
compared to
hypermarkets
The More for Less emerging consumers
…they are shopping online
(26%)…
Source: GS&MD Research “The emerging middle class consumers”, 2012
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The More for Less emerging consumers
…their main aspirations are buying
the house (42%), the car (32%),
education (27%) and travelling
(15%)…
Source: GS&MD Research “The emerging middle class consumers”, 2012
• The largest tour
operator in Latam
• Vertically integrated
• 665 Stores
• Multichannel
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The More for Less emerging consumers
…product brands are a key driver
to choose the stores…
Source: GS&MD Research “The emerging middle class consumers”, 2012
The More for Less emerging consumers
…the have not abandoned their
preferred stores (66%), however they
expect to shop in better ones
(66%)…
Source: GS&MD Research “The emerging middle class consumers”, 2012
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Vertically integrated
Source: GS&MD Research “The emerging middle class consumers”, 2012
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The More for Less emerging consumers
…stores drivers are proximity,
service and credit…
Source: GS&MD Research “The emerging middle class consumers”, 2012
70% of Brazilian women have
curly or frizzy hair
12 beauty centers
Vertically integrated – R&D,
manufacturing, retail,
service, experience
1 million customers served
in 2012
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The emerging middle class consumers
…stores lose them by providing
poor service and high prices…
Source: GS&MD Research “The emerging middle class consumers”, 2012
The emerging middle class consumers
…the home is the epicenter of
their lives…
Source: GS&MD Research “The emerging middle class consumers”, 2012
The home is the epicenter of their lives
52%
I spend time with my family at home
47%
41%
I watch TV/movies at home 39%
23%
I hang out with friends/boyfriend 35%
31%
I go to my families' home
21%
18%
I stay at home alone 24%
12%
I surf on the internet 11%
10%
Work 8%
10%
Shopping 2%
9%
Books 3%
5% Women
Study 2% Men
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The emerging middle class consumers
…the real revolution is yet to
come.
Source: GS&MD Research “The emerging middle class consumers”, 2012
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736 stores
15 years among the best
companies to work for
1.3 mn online customers
55,000 Facebook Stores
opened by clients
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Challenges and insights
Business model’s challenges
• Balance price and access with aspiration: make
dreams come true
• Cross channel: information, convenience,
shopping
• Enlarge the portfolio of services: tourism,
residential, education, connectivity
• Build a connection to the home
The bottom line
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The bottom line
• Think simple
• Define a clear and straight value proposition
• Pursue cost efficiency
• Integrate physical and digital channels
• Execute
Retail, Marketing and Distribution Channels
Alberto Serrentino
aserrentino@gsmd.com.br
Thank you!
Thank you!
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