NEW YORK: Local brands dominate the Brazilian luxury market and this success is inextricably linked to their digital competence, a new study has argued.
L2, the thinktank for digital innovation, in its latest Digital IQ Index report which covers Brazil, found that local brands took a 50% market share in luxury goods, compared to 35% for European brands and 15% for American brands.
The prominence of local brands was accounted for by their digital prowess in areas where global brands often failed. This included Portuguese language support, local payment options and region-specific programming.
With domestic prices on luxury goods up to two and a half times those in the US or Europe, many affluent Brazilians prefer to shop abroad. Some estimates suggest they buy 80% of such goods overseas.
But just four international brands offered international shipping to Brazil from their global e-commerce sites. And of 47 such brands considered in the study, most, apart from the hotel category, did not engage in native e-commerce. Those that did were mostly from the beauty category.
Sephora, L'Occitane, Clinique, Avon and Lancôme were among the international beauty brands that ranked in L2's top ten digitally engaged brands in Brazil. Sheraton also appeared as the leading international hospitality brand.
But the top of the list was taken by Brazilian beauty brands O Boticarío and Natura and fashion brand Melissa.
L2 highlighted paid search as an area where global brands were failing. While half had invested in local web properties, 40% of searches on Google Brazil took users first to a global site. In addition, only a quarter of global brands were buying against their own brand terms, and so were "ceding valuable real estate to discounters and auction sites".
Around one third of international brands were creating Brazil-specific content for Facebook, with 70% of these setting up standalone pages. In particular, Avon, Mary Kay and Tiffany & Co had achieved strong levels of engagement, but local brands dominated in terms of scale.
Data sourced from L2; additional content by Warc staff