The Fashion Industry in South America: Argentina and Brazil

When analyzing the South American fashion industry, it’s fundamental to remark that today is an industry getting a high level of consumer demand domestically, due to economic growth in some of their countries and strengthening in economic terms of the currencies. 

Fashion BrazilGood examples are countries like Argentina, Brazil, Chile and Peru, were the scenario has changed from that in 10 years ago, with a largest population and social inclusion leading the rise of the middle class and leaving the poverty line. The fashion industry, it’s expected to growth in terms of production level, pointing out that this countries can produce the garment pieces and establishing an exchange of goods between these services and products provided by some South American countries trade agreements such as Mercosur (the Common Market of the South).

However, not all of these countries agree about to mention MADE IN South America, because of the policies defined in the International Trade. Some of these countries promote import and export policies of free transit and tariff benefits for these items of fashion and on the other hand, certain countries instead have a series of restrictions on the entry of imported goods or high tariffs for the entry of these goods.

An example is Brazil, which for years held an important industrial development in terms of clothing, textiles and footwear and that has strong aspirations to export rather than import. Today the situation is somehow different, this economic boom brought to Brazil to have an income from certain international luxury brands such as Gucci, Chanel and Louis Vuitton which have successfully entered a market which has grown and strengthened its purchasing and economic level and it also has more consumers that can buy luxury items. Note that Brazil is a country with almost 200 million habitants and therefore the upper class market is larger and more attractive to new consumers eager to purchase luxury goods.

 On the other hand, the Argentina’s scenario is completely different with 45 million people with a majority female percentage and a high concentration of population in three major cities.  Here we have one of the busiest countries in terms of productive reconversion of the Fashion Industry in the last decade. The companies in this country are mostly founded by immigrants from different communities like Italian, Jewish, Spanish, Arabic. These companies are small and medium enterprises, which over generations have maintained in profitability despite changing times.

BagsOthers of them are new companies that emerged in the past 10 years through incentive policies towards entrepreneurial business activity within the country and for the formation of new companies. Something that was more than encouraged to return from labor sources attending a social reality of joblessness after the default that this country experienced in 2001. As reported by official bodies that are promoting this business activity, Argentina has one of the highest rates of entrepreneurship world.

Somehow, we are faced with an example, which allows to see that there is great domestically consumer demand, but not a large structure in Retail, nor strong presence of these business models, as they are known in European countries or the United States, like big companies from fast fashion H&M, Forever 21 or Topshop. But on the contrary Brands shops with branches or local business groups with different brands are always differentiating the market segment that drive their product and communication. These signatures are found throughout the different cities, in different ways, as franchises or exclusive own stores or multibrand stores in different malls and avenues, malls, galleries, etc. Many of these companies are becoming larger and is already gaining markets in countries in the same region, thus strengthening its regional presence and looking for partners on the same continent for commercial partnerships.

 

Following the case of Argentina and Brazil, there are incentives to these countries to generate an exchange of goods raw materials and finished products. Likewise create regional alliances to gain markets in other continents such as Oceania and Asia, the key of differentiation from other competitors that produce fashion, is given by the new generation of good design and quality.

To win markets that values a premium product is the motivation that exists for the development of the fashion industry and to continue the growth of this activity, therefore today the city of Buenos Aires in Argentina, has the largest number of students and new entrants to Fashion Design courses worldwide.

South AmericanIn terms of domestic consumption, the fashion industry in Argentina provides local consumers nearly 80% of the clothing, footwear and leather goods consumed in the country. These goods are produced domestically and imported another low percentage. Likewise Fashion companies in Argentina, year after years are preparing to expand into regional neighboring countries such as Chile, Uruguay, Paraguay, and it has  great expectations about arriving in Brazil.

Some South American countries that make up the group of countries with emerging economies are experiencing a unique moment in investments to develop the fashion industry in these countries. These are mainly large global companies from Fast Fashion, whom they see as a good investment opportunity, especially in Brazil and Chile because the levels of per capita income and currencies strengthened against the dollar, which promises a great setting for fashion investment of global companies looking to expanding in emerging economic markets and where there exists a  high demand for goods.