How Brazilian retailers can innovate to recover and emerge stronger on the global stage.

The recession of 2015-2016 was among the worst for Brazil, which had already suffered five such downturns in the last 20 years. Yet, despite lingering economic fears in early 2019, second-quarter financials showed an upswing to the economy. Which is good news for retailers who know how to approach shoppers who are still gun-shy, but also ready to spend.

“Yes, the recovery has been slow,” says Rip Greenfield, SVP Global Business Development & Alliances at Revionics. “But the consumer is feeling more optimistic.” That means that while consumers are still price-conscious, they are spending money, and providing opportunities for retailers.

Opportunities, that is, for retailers that can entice shoppers with just the right prices at just the right time. And, as recent research shows, one of the most effective ways to dial in just-right pricing is to leverage data science and artificial intelligence that takes in both real-time market conditions, and the profit margins retailers need in order to stay afloat.

Open to Dynamic Pricing

Research from Forrester commissioned by Revionics shows that, Brazilians are open to data-driven price adjustments to consumer goods. In fact, they’re even more receptive to it than their already receptive counterparts in the United States and Europe.

Seventy-nine percent of Brazilians surveyed said they were open to data-science-based price fluctuations, as long as the prices seemed reasonable.

That contrasts with 69% of survey respondents in France and 66% in the UK, with Germans being the most receptive to data-based pricing at 73%. Shoppers in the US are even more favorable, at 75%, but no group surveyed is more open to data-based pricing than shoppers in Brazil.1

One reason – Brazilians, while feeling less of an economic strain than in past years, are still on the lookout for bargains that might come with changing prices. “The habit of saving as much as they can is already installed in their behavior,” Greenfield says.

Digital Natives

Brazilian shoppers are also more open to bargains delivered via mobile devices than shoppers in Europe and the US. Which is a direct reflection of Brazil’s more youthful demography. “The average age in Brazil is lower than in France, the UK., and Germany,” Greenfield points out. Those young shoppers, who are less attached to the paper fliers and coupons favored by previous generations, will still look for bargains wherever they can find them. And all the better if those bargains show up in the palms of their hands.

“Young consumers are inclined to buy trendy and brand name products, particularly those products that are popular on social media,” Greenfield explains. “Moreover, those younger consumers are usually more susceptible to advertising and offers, especially sent via social media and phone apps.”

Not surprisingly, then, 80% of Brazilian shoppers surveyed said they were “slightly” to “very sensitive” to offers or promotions delivered via phone and apps. The percentage was in the 50th percentile range for French, German, and U.K. shoppers, and 66% for those in the US.2

Bargain Hunters

Brazilian shoppers are also more receptive to price matching than consumers in other markets. “Even though consumers usually remain loyal to their favorite brands,” Greenfield says, “they only do it if the price is right.” That means they’ll shop around for the best deals on their favorite brands.

Fifty-four percent of Brazilian consumers said they demand price matching by retailers on products they want to buy. That contrasts with 12% of consumers surveyed in France, 9% in the US, 8% in the UK, and only 4% in Germany.3

All of which means that Brazilians will go out of their way to find the best prices, and are keenly aware of the current state of the market for the items they’re interested in. Which in turn means that retailers who adjust their strategies accordingly will get the best results.

Retailers Need to Catch Up

Unfortunately, research shows that retailers don’t embrace dynamic pricing to the same extent as their customers. And there is a gap between Brazilian consumers and retailers about the sentiment of data-driven pricing.

Only 60% of Brazilian retailers surveyed believe that frequent price changes due to AI and data science would have a positive impact on shoppers. That’s 5% below European retailers who feel that way, and only a little above the 57% of US retailers who have a favorable view of the impact of data-based pricing on shoppers.4

However, with frequent changes taken out of the equation, more retailers surveyed did express a favorable view of data-based pricing. In other words, as long as retailers feel prices changes didn’t happen too rapidly, they are more open to price changes based on data.

That’s why when asked, “Do you believe that AI data-driven pricing would have a negative, positive, or no impact on your shoppers?”, 79% of Brazilian retailers responded, “Yes, it would positively impact our shoppers.” That’s a higher percentage than European (75%) and U.S. retailers (75%) responding the same way.

As the Brazilian economy continues to recover, that can only bode well for retailers seeking to provide just the right balance of delivering consumer value and protecting margins. Now they just need to catch up to their shoppers in embracing the technology needed to deliver results.

1 Understanding Retail Customers’ Pricing Expectations and Tolerances, a Forrester Consulting study commissioned by Revionics, June 2017
2 Ibid.
3 Ibid.
4 Retail Success Requires Personalized, AI-Driven Pricing Strategies, a Revionics-commissioned study conducted by Forrester Consulting, October 2018


About the author

Jeff Smith has over 23 years of experience in the software industry, with over 11 years working in retail price optimization. He was a founding member of Khimetrics, where he helped create the retail price optimization industry in his sales, marketing and product development roles. Throughout his career, Smith has managed software development teams, worked closely with clients during beta and installation phases, led worldwide product marketing teams, and performed software development tasks.