Foreign Buyers Jump on Bargains in Brazil

Attractive prices prompted buyers at Brazil’s two biannual fashion events.

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Attractive prices prompted buyers at Brazil’s two biannual fashion events to maintain purchasing levels even as the global financial crisis pressured them to buy more cautiously.

This story first appeared in the February 25, 2009 issue of WWD.  Subscribe Today.

The good pricing was caused largely by currency woes against the U.S. dollar and the euro. The downturn started hitting Brazil hard in September, and by January, the dollar had gained 36 percent against the local currency, the real, since mid-January 2008 and 42 percent since mid-June 2008 — the dates of last year’s Brazilian fashion weeks.

Additionally, the euro posted 21 percent and 24 percent gains against the real during those respective periods. These valuations made dollar- and euro-based fashion exports cheaper and more competitive.

Financial crisis aside, the 38 fashion-forward houses at the upscale São Paulo Fashion Week did not skew more commercial because “their signature styles are the key to their success,” said SPFW organizer Graça Cabral. Meanwhile, Fashion Rio’s 45 mainstream labels continued to offer apparel with broad appeal at more accessible prices.

The January editions of SPFW and Fashion Rio showed winter 2009 fashion and were open to the public, drawing the same number of local and international visitors as in prior years. At SPFW, most foreign buyers came from Europe, the Middle East and Asia, with a near absence of North and South American buyers.

At both fairs, 5 to 7 percent of visitors were trade, organizers said. SPFW drew a crowd of 75,000, among them 41 foreign buyers. Fashion Rio attracted 80,000 attendees, with 93 foreign buyers from more than two dozen countries.

The off-site showrooms of SPFW designers, as well as those of stylists without runway shows, brought in 1.5 billion reais ($652 million at current exchange), 25 percent more than at the January 2008 event. An expanded on-site showroom space, suspended at SPFW’s June 2007 edition, will reopen for next June or January 2010, organizers added.

Fashion Rio’s on-site salon featured nearly 100 showrooms and rung up a 1.6 percent increase in orders from domestic buyers (376 million reais, or $162 million) and a 1.9 percent increase in orders from foreign buyers ($15.8 million).

“Trend-wise, both fashion events were more in sync than usual — with both featuring oversize fashion like carrot-shaped boyfriend pants — and a lot of knitwear, especially heavy jersey,” said fashion consultant Gloria Kalil.

Among the looks at SPFW, Maria Bonita’s gray wool blazers went nearly to the knee and Huis Clos’ slightly shorter, sky-blue jackets were double-breasted. Meanwhile, Osklen offered oversize gray jersey dresses and Isabela Capeto featured below-the-knee white cardigans.

At Fashion Rio, Juliana Jabour offered bulky, geometric-patterned cashmere sweaters.

Foreign buyers found styles and prices to their liking in São Paulo. Raquel Marcos, owner of Bloom, an upscale Mexico City boutique, is buying Forum’s silk velvet evening dresses with black Swarovski crystal detailing in the shape of a horse “because they are trendy, commercial and not too expensive.”

“Mexicans are very status-conscious and will only pay high prices for famous foreign brands,” said Marcos. “I came to SPFW because the dollar’s valuation against the real makes it very affordable, and because its designers offer an alternative to the mostly American brands I carry.”

Citing the value of the euro against the real, Andrea Molteni of Tessabit, a high-end, 12-boutique chain in Italy’s Lake Como region, planned to buy Marcelo Quadros’ silk taffeta, asymmetrical evening dresses “because this elegant look came at a competitive price compared to well-known European brands.”

Yumiko Iwao, a buyer for Chandelier aquagirl, a chain of seven shops in Tokyo, touted Isabela Capeto’s cardigans. “This is the first fashion event I have gone to outside New York, Paris and Milan because, with the economic downturn, I need lesser-known brands at better prices,” she said.

But for other foreign buyers, price was not an issue, despite the slump in global consumption. “I came to SPFW not for less expensive fashion, but for glittery, embellished, hand-embroidered evening dresses that Indian women wear to stand out at parties and festivals,” said Pradeep Hirani, a buyer for Kimaya, an Indian department store chain with 13 units. “I found them, and I plan to buy $130,000 worth of seven or eight SPFW brands.”

Ruth Stocker, of her namesake specialty store near Stuttgart, Germany, was searching for a more conceptual look at SPFW, like Reinaldo Lourenço’s black silk crepe de chine evening dresses, covered with metallicized organza.

“These are perfect for our fashion-forward clients looking for unusual party wear,” said Stockler. “Although Reinaldo Lourenço isn’t as expensive as the Italian brands we mostly carry, price is not an issue with us or our clients, provided the clothes are strikingly unique.”

The strategies of these buyers reflect two distinct worldwide trends, apparent since the global economic downturn, said Robb Young, a buyer for Diptrics, a Tokyo-based fashion distributor.

“Most buyers are after better-priced, more commercial and interchangeable pieces. A smaller number are taking a counterintuitive approach and continuing to buy pricier, more specialized items to maintain their identity,” offered Young. “Similarly, many fashion retailers are introducing gimmicky strategies, like parties or promotions, to boost soft sales. A smaller number of specialty stores are doing the opposite, though, [to avoid] cheapening their image and because promotions set a precedent they will need to maintain.”

Lidia Alexandrova, luxury department manager for the Moscow-based Arts Group, with over 100 mass-market stores in Russia and Romania, planned to spend up to $30,000 on SPFW brands, among them Osklen, for short gray fleece skirts. She said her chain has devised strategies to cope with soft sales.

“Because we expect business to be down 20 to 30 percent in the next six months, we’re buying more carefully and inviting regular customers to Champagne events, where they can get free makeup classes,” said Alexandrova.

Hirani, of India’s Kimaya chain, said, “We have been trying to bring in more business by staging small fashion shows of our new collections.”

Tanla Özuzum, buyer for Vakko, a chain of more than 100 boutiques, multibrand and department stores in Turkey, who plans to buy Alexandre Herchcovitch’s flower print chiffon dresses, is taking another tack.

“Since our luxury business has dropped 10 to 15 percent, we have 50 percent off sales once a month for our high-volume clients,” said Özuzum.

But David Chayon, owner of Uffizi, an upscale shop in Short Hills, N.J., who will buy Huis Clos’ puffy-sleeve leather coats, took another approach: “We and other high-end stores near us are not offering gimmicks to boost sales, because fashion is our image and we want to maintain that.”

Peter Burstein of Feathers, two better multibrand stores in London, who was buying Patricia Viera’s suede-embroidered tulle shawls and suede-on-tulle waistcoats, took a similar stance.

“Because we offer one-of-a-kind investment pieces, sales gimmicks don’t suit our style, even in tough economic times,” he said.

Meanwhile, at Fashion Rio, Tricia McDonald from Belo Sol, a shop in Calgary, Canada, said: “To boost business, we’re beginning to stage wine-and-cheese events in clients’ homes and inviting them to private fashion shows of our newest brands.” McDonald was buying Siri’s bandeau, strapless bikinis at $20 a piece.

Pamela Shiffer, of her namesake London boutique, bought Squadro’s striped V-neck tricot dresses at $100 each. She said that in mid-December, “We had a two-day Champagne and chocolate event where we gave 10 percent discounts. And in April, to boost name recognition, we’re going to raffle off a fashion/hair/cosmetics makeover.”

Bill Adams of eXM Global, a U.S. distributor of swim, fitness and casualwear who bought Lucidez’s cowl-neck black viscose tops at $44, is taking a more pragmatic approach to boosting sales.

“I’m now giving my retail clients 90 days to pay for their apparel instead of requiring payment upon receipt,” said Adams. “I’m offering this type of financing to help my sales recover.”


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