Brazil Is Changing

By: Federico Machanski   

Federico Machabanski, is CCO and Founder en PARDES and CCO and Founder en Selectio. He is an expert on the South American / Sales toy business.

In my previous article, “Is Brazil the China of South America?,” I talked a lot about Brazilian toy manufacturers, an industry I hold close to my heart.

Today I will tell you a little about how importers and distributors work there and how the retail market in Brazil has changed.  If you used to travel to Brazil 15/20 years ago, you would find that several supermarkets were the strongest customers for toys in Brazil, something that has changed resoundingly.

At that time, there were several retailers, department stores, and toy stores, such as: – Carrefour – Pao de Acucar  – Wal Mart  – G Barbosa  – Makro  – Lojas Leader  – Lojas Americanas  – Lojas Pernambucanas  – Ri Happy – PB Kids And many other retail outlets. Each with its well-differentiated market and pricing strategy. All of them were direct importers in the toy category, especially when it came to private-label toys or open-market toys, and they also bought many units from local manufacturers and importers from Brazil. 

 Over time, there were very big changes in the retail sector in Brazil, companies that reduced their operations or closed, acquisitions of some companies towards others, mergers, and changes in strategy where the toy stopped having space in stores, which led to a very different panorama today, with a very large concentration of power for some retailers, and the opportunity for growth for others of medium size.

Some of the most significant changes that occurred over time and that most affected the toy were:

The merger between Ri Happy and PB Kids 

The enormous growth of Carrefour, buying participation in many retailers 

The significant growth of the ATACADO, an exciting business format, but one that does not have toys among its priorities 

The remarkable growth of the Home Centers, which also do not have toys among their priorities 

The fundamental appearance of state department stores, which have grown a lot and have increased their purchase of toys

The problems suffered for years by Lojas Leader and currently by Americanas, who in any case seek to recover 

The change from Wal-Mart to Big 

The reduction in the assortment and quantity of toys in the physical store of most retailers  

In any case, not all of it is bad news; as I mentioned before, other clients have taken precedence in the market, and there are so many that it would be impossible to mention them all here.  

In addition, in Brazil, we have a vast commercial area, the famous 25 de Marco, where you can find substantial toy customers, like the case of Armarinhos Fernando, which must be one of the biggest toy buyers in the country. 

Another important fact is the appearance of specialized stores in other categories, such as pets, which have grown significantly in Brazil, perhaps indirectly keeping a portion of the toy market budget. Some that we can mention are Cobasi and Petz, which have had enormous growth in assortment and number of stores, something that has surprised more than one.

From the distributor side, I greatly admire them since working in Brazil is very difficult. A few years ago, while working in a company, an attempt was made to open distribution in Brazil. It was extremely complicated. Not only is it complicated to sell, it is complicated to set a sale price, something that for any other country should be very simple, but here you have so many taxes involved, depending on the State in which you sell, if you cross a state with your truck going to deliver an order to a customer, etc; that a slight mistake can make you lose money even if you think that you have sold excellently.

These distributors are essential for the Brazilian market since they are fundamental in promoting brands, financing operations, importing and distributing to small and medium-sized stores throughout the country, and many others. Why do I mention import as an essential value of the distributor? Because if you don’t know, in Brazil, you need special authorization to be an importer, which is very difficult to obtain, which is called RADAR, and if you don’t have that, remember to be able to bring merchandise into the country. And you know what else? It is not only that, Brazil requires a very rigorous certification for toys for the importer, it is not enough to have the EN71, it is not enough to have the ASTM, nor is it enough for your factory to have BSCI, ISO9001, or any other quality certification, here You need to obtain the INMETRO for each of your products, something that is not easy, as I know? Because my company does it all the time, we sell all our toys already with INMETRO approval, and I can tell you that it is challenging. This ensures not only the quality of the products but also protection and healthy competition for local manufacturers, who must comply with these regulations.

I could be writing pages and pages about the Brazilian market, its distributors, retailers, department stores, toy chains, and many more things. Still, I think that with this, you have an overview of Brazil’s difficulties, but above all, the enormous potential of one of the most powerful economies in the world.If you want to know more about Brazil, do not hesitate to write to me a, or you can find me on my Linkedin profile ( ), where I can provide you with any information.

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