SÃO PAULO — Grupo Iguatemi is on track to open three premium outlet malls by 2018 to diversify its business amid Brazil’s deepening recession.
The move will see it open three malls under its new Ifashion outlet banner, including in Belo Horizonte and in Tijucas in Santa Catarina State. Another outlet will be built in a still-undisclosed location, said marketing director Aline Zarouk, who declined to reveal the level of investment or the brands that might sell there.
Local daily Gazeta do Povo reported a third, 150 million real, or $38.5 million at current exchange, outlet of about 600,000 square feet will open in Curitiba in 2017. The outlets will carry brands like Lacoste, The North Face, CK Calvin Klein, Levi’s, Sunglass Hut and Gap, it said.
The decision to launch the discount malls stems from an effort to tap Brazil’s B and C consumer segment as opposed to the A and B income level Iguatemi’s malls usually cater to. But Zarouk claimed it is not a strategy to survive the economic downturn, which will see Brazil’s gross domestic product shrink 0.5 percent this year and possibly more in 2016.
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“This has nothing to do with the recession,” Zarouk noted, adding that the slumping real is prompting more Brazilians to buy luxury at home, benefiting retailers in spite of the economic malaise sapping consumer spending. “We are a very solid, 50-year company. We just want to grow in a different way.”
Not all Brazilian cities have the purchasing power to support a full-fledged Iguatemi center “but we can be there with the outlet malls,” Zarouk said.
Iguatemi, which opened its first Iguatemi São Paulo location in 1966, had planned to roll out the discount format before Brazil’s economy began cooling three years ago, Zarouk said.
She added the company, which operates 17 malls throughout Brazil, has enough cash flow to finance the expansion without taking out debt.
Riding Brazil’s economic boom, Iguatemi opened six new luxury malls in the past seven years, each holding 250 to 300 high-end brands. The latest iteration is the 500-store Shopping Iguatemi Esplanada, which the group opened in Sorocaba, São Paulo State, last November.