Home and Garden in Brazil

Economic recovery leads to expenditure in home improvement but 2018 is marked by consumer uncertainty

As Brazil leaves behind the worst economic recession it has faced in the last century, retail expenditure has finally shown signs of recovery, albeit slow paced. As a result, there were improvements in unemployment and housing rates, higher consumer confidence and a 5% increase in the median disposable income per household, which contributed to Brazilians returning to consuming home products.

Do-it-yourself trend strengthens with consumer weariness in spending

With the Brazilian economy performing in a lukewarm manner, unemployment rates still high and rising real estate prices in urban city centres, the DIY trend became even more pronounced in 2018, especially amongst older consumers. Due to a less free budget and an overall knowledge of how to engage in home improvements and gardening tasks, mid-to-older consumers are avoiding employing a professional and looking for more convenient and self-serving ways to get the job done in a cheaper way.

Fragmentation in home and garden in Brazil is dichotomous

Whilst home and garden tends to be a fragmented industry in most countries – with Brazil being no exception, fragmentation is dichotomous as there are also plenty of product categories where up to five players dominate more than half of the sales. On one hand, products such as home tiles and gardening have over hundreds of local manufacturers, with some categories having even thousands, such as indoor furniture, shares are extremely fragmented and have a strong regional or even local recognition.

Internet retailing rises as a future key retail channel

Manufacturers are increasingly looking at internet retailing or new ways to engage digitally with consumers in an industry that is typically more conservative rather than in the forefront of disruptive retail initiatives. Brazilian retailers such as Magazine Luiza, B2W and Via Varejo have propelled this trend by enhancing and advertising their own marketplaces through third-party merchants, which has shown results.

However still modest, positive and steady growth projected over the forecast period

With the Brazilian economy expected to grow at a stronger rate and as the housing market continues to gain traction, consumers will tend to be more willing to spend on home and garden products. Future growth may be hampered by tardiness in highly expected reforms such as the pension and tax reforms, which will allow the government to spend more in strategic areas such as development and allow for higher confidence from both market investors and consumers.

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