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If you walk along São Paulo's Rua Oscar Freire and nearby streets like Bela
Cintra and Haddock Lobo you will visit a world which is beyond the means of over
99% of the Brazilian population - the world of luxury goods. Think of any famous
brand and you will find it here - Armani, Tiffany's, Louis Vuitton, Dior,
Bulgari, Montblanc, Cartier etc.
You can pay 180,000 Brazilian reais (about US$ 90,000) for a watch, 89,000 reais for a necklace, 50,000 reais for earrings, 5,000 reais for a blazer or a mere 1,200 reais for a pair of sunglasses. In a country with a minimum monthly wage of 380 reais and millions of people living below the poverty line you would not think there would be much demand for highly-priced products like these.
However, there most certainly is and luxury goods producers are queuing up to get into the Brazilian market. The latest two companies to announce their entry are the Italian shoe and tie maker Ferragamo (430 reais per tie) and the German travel goods producer Rimova.
A researcher at the FGV business school says an estimated 1% of the Brazilian population of around 186 million can afford to pay these prices - that's a tempting market of nearly two million people.
Around 70% of the customers for luxury goods stores are estimated to come from the São Paulo region. The state of São Paulo has been the powerhouse of Brazil's economy for decades and accounts for over 40% of national GDP. Its natural resources - rich farmland which produces much of the world's coffee, sugar and oranges - and the can-do spirit of its inhabitants have been responsible for its economic prominence.
However, other areas are also now expanding and Paulistanos are often outnumbered by visitors from places like Mato Grosso, Goiás and Minas Gerais. Great wealth is being created in these regions as a result of the boom in agricultural products and mining.
Vast areas of land in the Midwest, which were previously forest or scrub have been cleared for pasture and cultivation to feed the world's appetite for products like soybeans for animal feed and beef.
Farmers, landowners and agribusiness have turned to modern methods to increase production through the increasing use of machinery, automation, fertilizers intensive crop cultivation and animal and poultry breeding.
Some people have amassed fortunes by employing new more profitable methods of farming or selling their land to big agricultural concerns. One example is Blairo Maggi, the governor of Mato Grosso state who is the largest soybean planter in the world.
Maggi's family founded its fortune on exploiting the potential of the arid region known as the "cerrado" and created a group which is active not only in agriculture but also transport and energy.
Visit another rich agricultural area like Ribeirão Preto in the far north of São Paulo state and you will think you are in a first world rather than a first world country.
There are thousands of rich families like this who come to São Paulo to do their shopping. Many of them own homes in the city or rent hotel apartments known as flats. A driver from a taxi rank in Oscar Freire told me recently that most of his passengers were people like this.
Companies are now starting to look at the richer towns in the interior. The Estado de S. Paulo newspaper quoted the manager of an upmarket cosmetics line as saying their products sold as well in a town like São José do Rio Preto in São Paulo state as in the city of São Paulo itself.
The London Daily Telegraph described Oscar Freire as São Paulo's "Bond Street" in a recent piece on the city. A couple of years ago a property developer trying to sell apartments in the neighborhood compared it to Fifth Avenue and the Champs Elysées. This might be a fair comparison if these streets weren't filled with hundreds of security guards lounging outside shops, bodyguards (some armed) muttering into radios as they quickly shepherd their clients from shop door to car door, and car park attendants.
Oscar Freire has more security guards and car parking attendants than the shops have customers. This is not just because the rich like to be waited on but also for security reasons. Kidnapping is a thriving business and a number of high profile people or their relatives from the world of business, entertainment and sport have been kidnapped.
It is rare to see a case in the media these days, probably because most kidnappings are hushed up, kept out of the press and ransoms paid quietly. The very behavior of some of the rich makes them targets since they like to flaunt their wealth in the form of fancy cars, designer clothes and flashy jewelry.
Oscar Freire is about a kilometer long and stretches from Cardeal Arcoverde to Alameda Casa Branca¹ near Nove de Julho. The part between Cardeal and Rebouças is mainly residential whereas the stretch from Rebouças to Casa Branca is trendy and full of shops, restaurants, cafés etc.
Until about a year ago it was a rather place which had plenty of chic shops but the infrastructure was unimpressive. Stretches of the pavements were cracked and broken, littered with rubbish and dog shit, and the constant changes in tenancies meant that about a quarter of the stores were in a permanent state of renovation.
However, it was given a facelift during which unsightly overhead telephone and electricity wires were removed, the pavements widened and given a uniform covering and benches installed. It has been a great success and has attracted far more people, many of whom would normally go to shopping centers.
This has been good news for the shopkeepers but it has brought a number of disadvantages. First of all, traffic has increased enormously and streets like Consolação and Mello Alves which used to be reasonably free of heavy traffic are now choked during weekdays and weekends.
It would be a good idea to make Oscar Freire a car-free zone but this has probably not even been considered since most people want to use their own cars and there are also too many people making money out of providing parking services.
The result is that the street is often clogged with cars, driven by selfish impatient people who jump the red lights, ignore pedestrians and honk their horns in protest at being stuck in a traffic jam that they have created themselves.
A more important downside in my opinion is that many smaller shops which catered to the non-luxury end of the market have gone and been replaced by expensive places. A family-owned fruit and vegetable store at Peixoto Gomide has been turned into a so-called Irish pub. A little shop where you could have photocopies made and print documents has been replaced by a fancy Arab restaurant.
A bakery-cum-restaurant, known as a padaria, near Ministro Azevedo has been turned into a swanky restaurant which draws customers from an expensive hotel which has been set up on the other side of the street. This process has been going on for a number of years but the recent upgrade is speeding it up.
There are still one or two humbler places catering to the security guards, maids and caretakers who work in the locality but it is only a matter of time before they go. A number of places like this on the stretch between Mello Alves and Rebouças were knocked down last year as part of the construction of a new metro station.
In business terms, another downside is the fact that few of the stores or franchise holders are prepared to pay decent wages and attract the kind of staff luxury places like this have abroad. About a year ago I went into several shops with a foreign visitor who wanted to buy a present. Not a single assistant could speak English and they were unused to dealing with foreigners.
Also, as shops with sky-high prices are seldom busy, many of the assistants have nothing to do for most of the time and hang outside smoking and gossiping with the security guards and car parking attendants. This gives a bad impression and I am surprised that investors who have put so much money into these places accept such behavior.
This need not be the case. I once visited the headquarters in Rio de Janeiro of a famous jewelry store (which, incidentally, has a branch in Oscar Freire) and was impressed by the quality of service and the class of the assistants. All the sales staff could speak three or four languages fluently and were highly trained. It was not surprising that few visitors ever left the place without spending a lot more than they had expected.
All this wealth attracts beggars and shoppers are used to being pestered, usually by children and teenagers. However, the heavy security presence keeps criminal at bay and makes the place generally safe.
Security is a number one priority for people in São Paulo which explains the success of shopping centers and is another reason why Oscar Freire is now a magnet for shoppers not only from the city but from all over Brazil.
¹ Ironically this is where the body of Carlos Marighella, the leader of Brazil's Communist Party, was found in a car in 1969.
John Fitzpatrick is a Scottish writer and consultant with long experience of Brazil. He is based in São Paulo and runs his own company Celtic Comunicações. This article originally appeared on his site www.brazilpoliticalcomment.com.br. He can be contacted at jf@celt.com.br.
© John Fitzpatrick 2007
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