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SÃO POSH-O

Iguatemi polishes its status as Brazil’s bastion of luxury

BY MARÍA BIRD PICÓ

When Spanish retailer Zara was shopping for locations in Brazil three years ago, Shopping Center Iguatemi São Paulo was an obvious choice.

São Paulo’s ritziest mall is home to such luxury merchants as Baccarat, Emporio Armani, Ermenegildo Zegna, Louis Vuitton, Tiffany and Wolford, and therefore a perfect fit for fashionable Zara.

The three-story mall, which opened in 1966, boasts 376,740 square feet of retail space occupied by a total of 320 tenants. There are 43 food outlets and restaurants, and five movie theaters. Its posh Brazilian fashion retailers include Antônio Bernardo, Maria Bonita and Marisa Ribeiro.

“It’s one of the most unique shopping centers in the world,” said Brazilian architect Roberto Linhares, vice president of Beame Architectural Partnership, Coral Gables, Fla., who has done design work for Iguatemi. “When Iguatemi saw the competition of new malls in São Paulo, it went all the way up to get class-A shoppers. They have successfully geared their tenant mix to the best brands of the world.”

Tenants pay top price to be at Iguatemi, which also happens to be Latin America’s oldest mall. Cushman & Wakefield Healey & Baker’s annual Main Streets Across the World report consistently ranks Iguatemi the most expensive retail location in Latin America. When North America is counted too, Iguatemi’s $129-per-square-foot annual rent rate puts it at No. 8, in company with such elite locations as New York City’s Fifth Avenue and Beverly Hills, Calif.’s Rodeo Drive.

Little wonder, then, Zara is pleased to pay premium for its 16,000-square-foot locale, one of 12 Zara has in Brazil. The store met expectations during its second year of operations, Zara executives say, though they would not disclose exact figures.

Iguatemi’s sales were up 30 percent last year from the year before. “It is one of our most successful stores in Latin America,” said Pedro Janot, manager of Zara in Brazil. “It’s a premium location that is renowned nationally and internationally.”

Other luxury retailers expanding overseas include Tiffany, which opened a store in Iguatemi four years ago. Tiffany now has two in Brazil and four in Mexico, its only units in Latin America.

Wolford, an Austria-based boutique for fine hosiery, body wear, swimwear and underwear, has a unit in Iguatemi, one of three in Brazil.

“One of our prime aims is to position ourselves as a truly global brand,” said Alina Zimmerhäckel, manager of Wolford’s international public relations. “In São Paulo, of course, Iguatemi center provides the perfect surroundings to sell our luxurious product range. A great number of popular international brands are offered there, making the product range overwhelmingly impressive and uniquely exclusive.”

Brazil’s Rodeo Drive
Iguatemi’s setting is the exclusive Jardins district, nicknamed the Rodeo Drive of São Paulo for the scores of elegant stores and restaurants that surround it. Iguatemi (the name is a Tupi-Guarani Indian word for thick, grassy river) is owned by a group of private investors that includes the Jereissati Group and some pension funds. The management firm, Iguatemi Empresa de Shopping Centers, also handles other malls in Brazil.

“The demographics are ideal,” said Waldir Chao, the mall’s director of operations. “The per capita annual income of the area’s residents is double the average for Brazil.” (The area’s per capita income is $8,320 per year.)

To be sure, words like “premium” and “Louis Vuitton” and “Armani” are not on the lips of most people in Brazil, a country international aid organizations rank second only to South Africa in terms of income inequality. The lowest 20 percent on Brazil’s income ladder account for barely 2.4 percent of the gross domestic product. One-third of its 183 million inhabitants live on less than $2 a day, according to the World Bank.

But it is other statistics that account for Iguatemi’s success. One of the world’s 10 largest economies, Brazil’s GDP is a staggering $1.375 trillion and growing. São Paulo, the capital city, accounts for between 35 percent and 40 percent of the country’s GDP. This means wealth is concentrated in fewer hands, creating a sizable large pool of affluent clients. In fact, the World Bank reports that the richest 10 percent account for 46.7 percent of the country’s consumption.

“Iguatemi is not only well located but was also the first shopping mall built in Brazil,” said Paul Weeks, a director in the São Paulo office of Cushman & Wakefield Healey & Baker. (Today it is one of 92 shopping centers in São Paulo.) “It’s where wealthy Brazilians have traditionally shopped.”

Iguatemi owes its success to its decision to cater to the crème de la crème, retail experts note.

“Sales at Iguatemi are always good,” said Patricia Gaia, general director for Emporio Armani in Brazil. “It caters to a class that, thank God, doesn’t suffer a lot during the economic downturns.”

It did not hurt that the government eased restrictions on imports in the late 1990s, removing an incentive for Brazilians to go overseas to buy their luxury goods. Iguatemi further safeguards its livelihood by barring tenants from opening additional stores within roughly a mile and a half (2.5 kilometers) of the mall.

The profile of the Iguatemi shopper is the dream of any mall operator. Sixty percent are women, and they are affluent. They visit up to three times a week, and 58 percent actually make a purchase when they do. Seventy percent have university degrees, half are between 25 and 44 years of age, and 32 percent are over 45. It comes as no surprise, then, that total sales exceeded $444 million last year.

To consolidate its position as the exclusive shopping destination, Iguatemi unveiled a new wing in October, Fashion Two, consisting of 129,000 square feet of high-end fashion and featuring such designers as Dolce & Gabbana and Emporio Armani. Customers can find such services here as jewelry and tennis-racket repair, tailoring and sale of tickets to plays and concerts. Shoppers can eat in style at the new Armani Caffé.

Iguatemi patrons get a wide range of food choices, from a somewhat-swanky McDonald’s to Gero Caffé, owned by the Fasano Group, which runs some of São Paulo’s best restaurants.

To round out the offerings, Iguatemi will introduce later this year six small, state-of-the-art movie theaters. Three of the five existing screens are being eliminated to accommodate the six smaller theaters with a capacity for 1,200 viewers. And, of course, shoppers will be able to make reservations for seats. In Chao’s words, it is Iguatemi’s philosophy that “if you must have them, let’s make sure to have the best.”

It is this standard that makes Iguatemi a beacon to the world’s best retailers. “It’s vital to be here,” says Armani’s Gaia, “because this is the most important mall in Latin America.”