Fashion and drugstores on the focus of mergers and acquisitions in 2011
Valor Econômico
Segments of the retail with completely distinct dynamics, the segments of fashion, drugstores and building material should present a common point in 2011: they are potential targets of mergers and acquisitions. The clothing market, in particular, that offers high gross margin (nearly 50%) tends to attract the attention of international competitors. That is the main conclusion of a study made by the consulting firm Alvarez & Marsal on the scenario of the retail sector in Brazil. According to the survey, obtained exclusively by Valor, the segments of supermarkets, hypermarkets and durable goods are already at concentration levels close to those of developed countries, like the United States, in which the five largest competitors are responsible for 40% to 50% of the total market. "Fashion, drugstores and building material, however, remain pretty much spread out", says Eduardo Seixas, managing partner of Alvarez & Marsal, responsible for the study.
In the opinion of Seixas, the offer of credit allied to the high rates of employment should favor the clothing market even more. "The consolidation potential is clear in the segment", he says. That because the four largest chains exclusively dedicated to clothing correspond to only 15% of the total sales, which turned around R$ 58 billion (US$ 34.1 billion) in 2009, says the consultant. "Nearly 60% of the market in the country is made up of small businesses of regional coverage, which greatly dominate the interior of the country", he says.
The annual average growth in the segment was 23% in the past five years, with annual per capita sales of US$ 300. Most young inhabitants (65% of the Brazilians are below 39) and the growing participation of women in the labor market (they are currently responsible for 89% of the decisions in the purchase of clothes) are other factors that tend to attract the attention of the multinationals, says Seixas. One of the candidates would be the Swedish H&M, which has already announced this year its expansion to countries of Eastern Europe and the Middle East. "They're always looking at the Brazil".
Despite the moment of consolidation in different segments, Seixas recalls us the fundamentally familiar structure and the cultural characteristics of most companies may hinder some deals. "A chain like Pernambucanas would be an excellent platform to enter the Brazilian market", he says. But it is a private family business and, apparently, against negotiations, he adds.