RIO DE JANEIRO, BRAZIL – A Balmain blouse with a Paulo Camargo blazer. Mixed pants and Alexandre Birman sandals. A Chanel handbag.
Rio de Janeiro doctor Andreia Frota’s “look of the day” – owner of a clinic specialized in facial injections attended by the famous and wealthy in Barra da Tijuca, Rio’s west zone – rarely costs less than R$10,000 (US$1,918). She is part of a group of Brazilians who, prevented from traveling abroad because of the Covid-19 pandemic, began to spend much more on luxury products in the country.
Frota says that with the devalued real (R$), waiting for a trip abroad to buy luxury items became unnecessary, as they can be purchased today. “The higher dollar and euro have made it less advantageous to buy the brands directly abroad. It doesn’t make that much difference anymore,” says the doctor, a regular at the Village Mall, the main luxury brand mall in Rio and adjacent to her clinic. “It’s better to go to Chanel next door than to spend it on a trip.”
This trend is reflected in the figures. The Brazilian Shopping Mall Association (ABRASCE) estimates that overall mall sales were 16% lower in the week of July 12-18, compared to the same period in 2019, before the pandemic – which highlights that retail as a whole is still struggling to rebound from the hit it suffered last year. Yet luxury malls celebrate very different data and set expansion plans in motion.
JHSF, the company that owns the Cidade Jardim shopping mall, the Catarina Fashion Outlet and other high-end developments, reported 50% higher sales by mall tenants in May, June and July, compared to the same period in 2019. Among international brands, growth exceeded 100% compared to the pre-pandemic period.
Robert Harley Bruce, CEO of JHSF Malls, says that the high-income consumer is eager for trends and novelties. “Undeniably, the segment took off from the rest of the economy,” he evaluates.
The competition is experiencing a similar scenario. In the sector’s largest premium consumer group in the country, the Iguatemi chain, sales posted a “Christmas-like rate” as of May, after the second wave of the pandemic, says Cristina Anne Betts, the company’s financial and investor relations director. In the first reopening of the sector, last year, consumers were still reluctant to return to the malls – they spent little time in malls which operated on restricted hours.
In the 2021 reopening, however, the scenario has been different. “Consumers are more familiar with the safety protocols. In addition, they have returned to everyday life: they are no longer at the beach house or in the countryside, they are in their own homes, with their children attending school in-person. This more normal scenario contributes to luxury goods consumption,” says Betts, who will replace Carlos Jereissati as Iguatemi’s CEO as of January.
According to sources in the sector, the advantage for malls is owed to the fact that this public is not only spending in Brazil the money they would otherwise spend in outlets or luxury stores abroad, but also part of what would be spent on other items related to tourism, such as restaurants and trips.