Carlos Jereissati, CEO Iguatemi, cautious but positive about Brazil’s luxury market (Exclusive Interview)

How did your company perform in 2020 and what are your expectations for 2021? 

We were closed for 2 months during our first shut down. When we reopened, Iguatemi was able to quickly recover. Our 3rd quarter was up 57% from 2nd quarter, and the 4th quarter was up 86% from 2nd quarter. We had another shutdown in March 2021, but we had put many tools in place that we developed in 2020 like our customer service via Whatsapp, the growth of Iguatemi 365 online marketplace, and our drive-thru drive-thru service helped us maintain and recover even more quickly this time around.

Are there luxury brands that did better (to your information) – for example, more shoes brands than apparel brands.

The best performing luxury brands for our malls were the ones with very restricted distribution such as Chanel and Hermes. They do not have an online presence in Brazil, so our customers had to rely on their brick-and-mortar stores to purchase their products. Luxury brands with a wide assortment of comfortable clothes also did very well, as we saw in many other parts of the world as well. And luxury brands focused on timeless and heritage products such as jewelry fared better than others.

We also saw a shift in consumer spend on more casual brands. This was a trend that was already in place before but was accelerated with the pandemic. Low key brands selling casual products across categories (shoes, bags, Ready-to-Wear) did well.

Have there been any changes in the profile of your customer? And the Brazilian (U)HNWI? (Ultra High Net Worth Individuals)

Many of our customers that used to travel and purchase abroad increased their spend locally. This helped our tenants and our own Iguatemi 365 marketplace to grow their sales and strengthen their relationships with these customers, including (U) HNWI.

At Iguatemi, we’ve had a very robust Loyalty program that grew over the years, and it became even stronger during the pandemic. We provided Personal Shopper assistance for long-distance purchases, we help our clients with their needs for special occasions by offering expert curation and advice.

We opened a Pop-up store in the countryside of Brazil where many of our clients were quarantining and spending their weekends, and we made our services available through Live Streaming and Zoom private and group sales sessions. All of these adjustments and our digital and online presence helped us to not only maintain and service our existing customer base, but to also attract many new customers across our Brazil.

What about e-commerce / online shopping?

IGUATEMI 365 was launched in October 2019, and April 2020 sales were 5x times sales from March 2020. The pandemic and social isolation accelerated Iguatemi 365’s growth and development, allowing us to reach many cities in Brazil and increasing our brand mix.

Has the perception of luxury changed, if in any way? – for example, people buying branded products which increase in value in time – so they also buy as an investment.

I believe the perception of luxury has remained the same, with a greater focus on items that retain their value like jewelry. We’ve seen the worldwide growth of the resale market, and I think its perception of category has changed in Brazil and it is now considered part of the luxury market.

We are happy to announce that Iguatemi 365, our online marketplace, is launching a partnership with Etiqueta Unica, Latin America’s largest luxury goods online resale platform. The partnership is called LIFECYCLE: Iguatemi 365 will give Etiqueta Unica’s seller the opportunity to turn their receivables from their sales into Iguatemi 365 gift cards. As a bonus, Iguatemi 365 will add 10% to the seller’s receivables. We are excited to launch our partnership on May 11th .

Do you also have local luxury brands in your stores? How have such local luxury brands performed?

Our customers have been buying more local Brazilian brands, it’s been a strong before the pandemic. But with the restrictions in travel and a heightened sense of community, we definitely saw a nice resurgence of local luxury brands.

With possibly the pandemic easing and the prospect of resuming international travel, is shopping abroad by the rich still a major challenge?

Our customers always travelled and purchased abroad. But nothing will ever beat the speed and convenience of buying locally for your everyday, more immediate needs, the excellent customer service that our Brazilian stores can provide, and the beautiful environment that our customers grew accustomed to and appreciate in their shopping experiences at Iguatemi. And now, with Iguatemi 365, we are able to reach many customers in Brazil that we did not before having an online marketplace, and that will for sure offset any changes in sales due to international travel.

Even as they go back to travel overseas, we believe that these customers got accustomed to purchasing locally, and I believe that in the near future they will buy more locally than in previous years, even as travels restrictions are lifted.

Despite the pandemic restrictions, you still had news stores opening in your locations. Tell us more.

Despite the severity and the length of this pandemic, we know it is a temporary crisis. Our malls continue to be a beacon for international brands, and their gateway to Brazil, and Brazilian brands that are growing and thriving will also want to have their own stores to reach their customers directly.

In addition, with Iguatemi 365, the brands that open stores at our Iguatemi malls will be able to be part of our online marketplace as well, expanding their visibility in Brazil and increasing their sales opportunity. This year we opened a Balenciaga store in April, we plan to open Golden Goose store in June and an additional Ferragamo store by end of the year.

Is there one challenge or several challenge which will still remain? What about opportunities as you look ahead?

The pandemic is not yet curtailed in Brazil, so we need to be careful and plan conservatively in 2021. We believe that our growth at Iguatemi 365, coupled with the strengthening of our relationship with our customers in our physical spaces will be a great combination going forward.

Our company showed a lot of resilience and we are excited to grow our opportunities with our online business, our brick and mortar malls, and our online marketplace pop-up stores.

What about international retail concept stores such as Dover Street Market? Is this something you are considering or you already operating a similar concept?

It’s been very challenging to operate international concept stores due to their assortment complexity and Brazil’s complicated importation process. Today, Iguatemi 365 is serving that need: we have over 400 brands in our online store, with a combination of household names such as Tiffany & Co., Dolce & Gabbana, and Polo Ralph Lauren, but also smaller special brands such as Mansur Graviel, Amrose Paris, Ron Dorf and many others. With this strong brand mix, our next step is to open a Pop-up store at our flagship mall Iguatemi Sao Paulo and continue to explore other locations where our customer are such as the country side and the resort areas of Brazil.

Carlos Jereissati, CEO Iguatemi – Exclusive Interview