By  on July 25, 2012

Foreign buyers at Rio de Janeiro’s two fashion fairs this season found that a favorable exchange rate made summer apparel prices more affordable than usual.

Fashion week here comprises two simultaneous fairs of mainstream labels. One group, Fashion Rio, stages runway shows and holds an off-site salon called Rio-à-Porter, while the other organizer, Fashion Business, operates a separate salon with a different group of exhibitors.

Foreign buyers at Rio-à-Porter found pricing competitive. The Brazilian real lost 24.5 percent against the dollar and lost 5.2 percent against the euro since last year’s edition, making exports cheaper in American and European markets.

Currency fluctuations aside, Brazil’s economy drives the domestic market. “The economy is expected to grow by 3 percent in 2012, as it did in 2011. But it grew very little in the first half, with greater growth expected in the second half,” said economist Roberto Teixeira da Costa. “So I expect now-stable retail sales, including fashion sales, to rise slightly. But I don’t see a big retail boom on the horizon.”

Vendors at Rio-à-Porter agreed, saying that domestic-market sales were steady compared to last year.

“At this Rio-à-Porter, we sold the same amount as last June, even though our sales tend to increase by 20 percent from one year to the next,” said Alessa Midani, the owner of the Alessa brand. “I think that’s because the fashion market has been flat for over a year.”

Siaulin Lieu, commercial director of Maria Bonita Extra, with 15 boutiques and five franchises nationwide, added, “Our Rio-à-Porter sales did not increase over last year, but should increase by yearend because retail-sector growth is expected to be much higher in the second half compared to the first.”

She added that even though the real has devalued significantly against the dollar since last year, it’s still overvalued against the greenback. “And this means that middle- and upper-middle-class Brazilians continue to go to the U.S. to buy cheaper, dollar-priced fashion.  And this keeps our sales from rising.”

Fred d’Orey, owner of Totem, with 10 boutiques in Rio and São Paulo, also said sales at Rio-à-Porter were even with last year: “The average middle-class buyer continues to have a tight budget because his income hasn’t gone up much.”

Guilherme Kosmann, institutional manager of MCF Consultoria & Conhecimento, a retail and luxury consulting firm in São Paulo, said that a vast middle class with little disposable income should keep sales of mainstream fashion flat. But he said that a growing demand for qualified professionals has boosted the income of the upper-middle class, and greatly increased demand for better fashion labels.

“Right now, the market for mainstream fashion, like that shown at the Rio fairs, is nowhere near as strong as the market for luxury domestic and imported brands,” said Kosmann. “And in São Paulo, where fashion tends to be more upscale, the JK Iguatemi mall, a huge luxury fashion emporium, as well as other luxury malls there, will cater to this increased demand for high-end fashion.”

MCF estimates that the luxury market in Brazil, of which fashion accounts for 50 percent, was between $10.5 billion and $11 billion in 2011, and is expected to grow by 15 to 20 percent in 2012.

Rio-à-Porter featured 119 vendors, down from the 169 exhibitors at last year’s edition, because it relocated from a converted pier warehouse to a smaller space in a converted mansion.

Fashion Business featured 170 vendors compared to 310 exhibitors a year ago. It also shifted venues, from five spacious tents in the city’s marina to a smaller space inside a luxury mall and an adjacent hotel.  This year’s event did not feature runway shows.

“Fashion Business exhibitors who were also at the event last June saw sales increase by 40 to 60 percent,” said organizer Eloysa Simão.

Fashion Rio and Fashion Business will no longer hold their twice-yearly fairs in January and May-June. The changes are being made to be two to three months ahead of the current market timing, to help with production and timing of deliveries.

Both groups will hold events this October for winter 2013 collections.

Starting next year, Fashion Rio will hold its fashion weeks in March (for summer collections) and October (for winter collections), whereas Fashion Business will hold them in April and October.

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