Big and different

In comparison with its neighbours Brazil, the biggest and most populous country in South America, is manifesting the lowest rates of growth in the DIY and garden market. Though “lowest” is admittedly relative here: growth in 2012 came to four per cent. According to information from Euromonitor, the most recent figures for the home improvement and garden stores show sales of BRL 43 bn (approx. US $ 21 bn). Once allied channels of distribution are included in the calculation the home and garden sector accounted for sales of US $ 34.8 bn. The continent’s only Portuguese-speaking country differs from its neighbours in still another respect: the market leader in Brazil had a market share of no more than five per cent in 2012. The company in question here is the Leroy Merlin DIY chain, which is part of the French Groupe Adeo. Incidentally, that again is a feature with a difference: in no other country on the continent is there an overseas participant in the marketplace. At the moment it looks as though the chain should be able to maintain its relatively dominant position. It claims to be the most rapidly expanding DIY retailer in the country, having achieved a sales increase of 14 per cent in 2012. At the same time its total number of stores rose by four to 29. The company’s presence is limited to the south-east of the country and the big cities like São Paulo and Rio de Janeiro. However, that does not distinguish Leroy Merlin from the rival multiples Telhanorte (34 stores, part of the French Saint-Gobain Group) and C&C Casa & Construção (44 stores, an increase of four). In Euromonitor’s assessment of the situation, the market is already overcrowded, especially in these metropolitan areas. By contrast, other big cities as well as smaller towns and rural areas still offer plenty of potential for ex­pansion. This is where the independent dealers could well find their opportunity. They are seen as a viable alternative to the big chains in the provision of a basic range of products, especially since consumers attach great importance to accessibility and convenience. Conversely, the modern forms of retailing are able to use financing schemes as well as customer and credit cards to attract the important lower middle classes. The combined total of independents and multiples amounted to 164 800 at year’s end, having risen by no more than one per cent in 2012. In four years’ time that figure could rise to over 173 500, though at the same time it is expected that…