RIO DE JANEIRO // Brazil has been long dismissed as the land of skimpy bikinis and rubber flip-flops. But with its galloping economy and hordes of newly minted millionaires, the South American giant is the fashion and luxury industry's newest darling.
Fashion insiders from Brazil and beyond descended on Rio de Janeiro for the city's five-day-long winter 2012 displays, which were wrapped up on Saturday.
Prada and Bottega Veneta opened boutiques here over the past months, and a host of other top-tier labels are expected to open shop throughout the year. Consumption of luxury goods by Brazil's booming middle and wealthier classes is growing, despite an economic crisis that weighs on demand in Europe and the United States.
But for luxury labels scrambling to get a foothold here, there are major hurdles hiding behind the dollar signs.
"People think 'Brazil: football, the beach, caipirinhas, that it's all super relaxed here,"' said Abraao Ferreira, a Brazilian-born fashion industry consultant. "Next thing you know, their product is stuck in customs for three months. Then they start to realise that not everything in Brazil is as laid back as it might appear."
Brazil's red tape is legendary, as other industries find when they try to move into Brazil. In the latest "ease of doing business" ranking by the World Bank, Brazil came in at No 126, despite being forecast to overtake Britain as the globe's sixth largest economy.
Just getting goods through customs in Brazil is a Herculean feat, and situations like the one Mr Ferreira described happen with sobering frequency.
"When you want to import things into Brazil, you have to do everything absolutely by the book," said Bruno Astuto, a fashion editor for Brazilian newsweekly Epoca and columnist with Vogue. "The problem is that the book keeps changing and they keep adding pages or chapters, so a lot of times merchandise doesn't get to the shops until months later, if at all."
And that's just the beginning.
Brazil's stiff tariffs on all imports push the already-steep prices of luxury goods into the stratosphere.
"It's a really difficult market," said Astuto. "Because of the duties on imported goods, luxury products here can end up costing from two to four times the price outside Brazil."
At multi-brand stores, price inflation can reach epic proportions, Mr Astuto added. Once you factor in the sales taxes and the retailer's margin on top of the import duties, ticket prices can reach up to 18 times the product's wholesale price, he said.
At a mall in Rio's exclusive Leblon neighbourhood, a pair of women's flats by Salvatore Ferragamo - sold at the Italian shoemaker's own store - cost 1500 reais, or US$842 (Dh3,092) at the current exchange rate. Online in the United States, they retail for $395. At the Burberry store in Sao Paulo, a trench coat that retails for $915 on its UK website was selling for 3,695 reais, or $2075.
Another challenge for international brands arriving here is the strength of the country's domestic clothing industry.
Brazil is the world's fifth-largest textile producer, according to industry statistics, and Vogue Brazil and other fashion magazines here don't just feature top-tier international labels such as Chanel, Dior and Lanvin. They are also chock-a-block with domestic brands that have virtually no name recognition outside the country.
Ever hear of Osklen? Maria Bonita? Alexandre Herchcovitch? In Brazil, these home-grown labels are household names with a devoted fan base among the wealthy elite as well as the country's growing middle class.
At the country's two fashion weeks, one in the economic hub of Sao Paulo and the other in Rio, these and dozens of other local brands field their Southern Hemisphere season-appropriate wares. That there are no real seasons in this tropical country, where it's perpetually spring-summer, also makes things more complicated for international labels.
And though Brazilian brands are rarely available outside the country, here they provide real competition for foreign luxury labels.
"Brazilian brands know how to treat their customers," said Jorge Grimberg, a marketing director with the trend forecaster Stylesight. "You have to pamper them, make them feel special, treat them like friends."
The kinds of sales tactics that work in other developing countries do not work in Brazil, where sales staff knit tight friendships with their customers. This is true across industries, whether cars, kitchen supplies or banking services.
"Brazilian consumers are extremely loyal if you know how to treat them right," Mr Ferreira said. "This can eventually work in foreign labels' favour, once they crack the code and figure out how to spoil customers here."
Brazil has always had a super rich elite with extravagant tastes. But booming commodity prices fuelled by Chinese demand, along with some of the world's biggest offshore oil discoveries, have created an expanding, new class of wealthy Brazilians.
