BRAZILIANS HUNGRY FOR FASHION LABELS
Byline: Michael Kepp
RIO DE JANEIRO — South America continues to be a mine of untapped potential for international fashion labels.
Foreign women’s lines continue to trickle into Brazil, and despite less-than-booming economic times, well-healed Brazilian women haven’t lost their taste for foreign apparel.
Brands such as Versace, Kenzo, Fendi and Armani began flooding into this country in the mid-Nineties, when prohibitive import duties were lifted. And the September opening of Brazil’s only Thierry Mugler boutique and the debut of Brazil’s — and South America’s — first Christian Dior women’s store shows that, despite a recent economic slowdown, women here will find spending money for the products and brands they like.
The 1,076-square-foot Thierry Mugler store was opened by Eclat, Sao Paulo’s second-largest retailer of international women’s fashion.
Kika Rivetti, a partner in Eclat, got the Mugler license shortly after the first Mugler licensee in Brazil closed its Sao Paulo store in late 1998, when nonstore-related reasons forced it into bankruptcy.
The new Thierry Mugler store is next to the recently relocated Eclat boutique, in the Jardins area of Sao Paulo, the most exclusive shopping area in the city that boasts Brazil’s highest per capita income. Jardins, Brazil’s version of Madison Avenue, is home to most of the foreign status boutiques that have come here since the mid-Nineties, including Kenzo, Gianni Versace, Ralph Lauren, Emporio Armani, Louis Vuitton, Cartier and Mont Blanc. Tommy Hilfiger and Hugo Boss recently opened their second Sao Paulo stores in the Jardins.
The Mugler store carries the signature collection, Mugler’s secondary line and a collection of shoes and handbags. It does not carry men’s wear or gloves. Projected six-month sales for the fall collection are $1 million. The Mugler store is linked on the inside to Eclat, which carries such labels as Sonia Rykiel, Givenchy, Badgley Mischka, Gianfranco Ferre, Vivienne Westwood, Roberto Cavalli and the Malo, Brunello Cucinelli and Loro Piana cashmere lines.
Rivetti said her Thierry Mugler prices ($2,500 for a signature suit and $700 for a dress from the secondary line) are about 15 to 20 percent cheaper than those in the U.S. and 20 percent more expensive than those in Europe. Dollar figures are converted from the real at current exchange rates.
South America’s first Christian Dior women’s store — Buenos Aires boasts a Dior men’s store, also in the Jardins — is wholly owned and managed by Dior, unlike the Thierry Mugler store, which is a franchise. Currently, Cartier and Louis Vuitton are the only other big foreign fashion brands that have wholly owned stores in Sao Paulo. The rest are licensed franchises.
“Dior didn’t want to open a franchise store in Brazil because this middleman route means that franchise prices are 15 to 20 percent higher here than wholly owned-store prices,” said Roseangela Lyra, the director of Christian Dior in Brazil, who added that Dior’s prices in Brazil will be the same as in New York and 10 to 15 percent higher than in Europe.
Lyra said that Dior delayed a bit in coming to Brazil, relative to the other foreign women’s fashion labels that have flooded into Sao Paulo in the past few years.
“We decided to build the Jardins store from scratch and offer our own private lot, which meant some $3 million in investments. So we had to study the move to puts roots down in Brazil very carefully.”
The Dior store, which opened Nov. 24, carries Dior’s entire women’s ready-to-wear line, along with purses, shoes, gloves, perfumes, lingerie and scarves. Lyra projects $2.5 million in first-year sales. Daslu, Sao Paulo’s biggest foreign women’s multibrand retailer, will continue to carry Dior apparel, but won’t offer accessories.
Lyra said that the mid-January devaluation of the real (by a current 60 percent against the U.S. dollar), which caused dollar-priced imports to skyrocket in reais (the plural of real), would affect Dior customers. But she added that the lagging economy, which has shown less than 1 percent GDP growth in 1999, wouldn’t hurt business much.
“Our client base still hasn’t fully absorbed the fact that import prices have, in reais, skyrocketed since January, and this will affect sales somewhat,” said Lyra. “But the sluggish economy won’t affect sales because our clients pocketbooks aren’t very much affected by slow economic growth.
Rivetti of Eclat and Thierry Mugler said the effects of the devaluation on her clients had mostly worn off, 80 percent of them having returned since January.
“Most of my clients have either absorbed the devaluation shock or are well-off enough that the shock didn’t bother them very much,” said Rivetti, adding that the same held true for some of the other foreign women’s fashion label boutiques in Sao Paulo.