Woman looks at advertising hanging on the wall
Woman looks at advertising hanging on the wall of a house in the community of Pirambu, in the Brazilian state of Ceará. Photo: Courtesy/Outdoor Social

With a billionaire potential, Brazilian favelas will be decisive for economic recovery in 2021

A study by Outdoor Social shows that the consumption potential in the 10 largest peripheral communities in Brazil reaches BRL 159 billion

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Looking at poor communities as creative and consuming powerhouses, escaping the stigma of violence and lack of urban structure is paramount for any brand interested in growing in Brazil. This is what a study by Outdoor Social, a social business that has been working with media and communication for the periphery since 2012, points out. According to the study, the ten largest Brazilian slums’ consumption potential is BRL 159 billion. In them, 262,000 commercial establishments move the local economy.

The study’s methodology uses geolocalization tools and data from public sources, such as the Brazilian Institute of Geography and Statistics (IBGE), the Central Bank, and data on consumption and transaction volume of credit card companies. The survey was carried out at the request of the “G10”, a group of leaders from the ten largest slums in the country, including Rocinha (the most populous in Brazil, with over 100,000 inhabitants) and Rio das Pedras, in the state of Rio de Janeiro; Paraisópolis and Heliópolis, in São Paulo; Cidade de Deus, in Amazonas; Pirambú, in Ceará; Coroadinho, in Maranhão; Baixadas da Estrada de Nova Jurunas and Baixadas do Condor, in Pará; and Casa Amarela, in Pernambuco.

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The name G10 refers to the G7, the group formed by the world’s richest countries.

In addition to generating data to guide companies that want to invest in slums but have few numbers to help them, the G10 also establishes partnerships with businesses that already see this potential for consumption. One of them is the logistics startup Loggi, which started a pilot delivery project in Paraisópolis two months ago. According to the study, this peripheral community’s consumption potential, the second-largest in the country, is BRL 578 million.

“There are businesses of all sizes and people of various classes in Paraisópolis. And when you think about the favela, you don’t talk about business as traction, but only focused on individual entrepreneurs,” criticizes G10 co-founder Daniel Cavaretti.

Daniel Cavaretti, co-founder of G10 Favelas, which brings together the largest peripheral communities in Brazil. Photo: Courtesy/G10 Favelas.

Indeed, most businesses in these communities are classified as Individual Microentrepreneurs (MEI) – 78% of the total, according to the study. This business modality was created in 2008 in Brazil to encourage the formalization of informal workers by reducing the tax burden over them. Some of the largest Brazilian companies, such as the cosmetic industry O Boticário, and the retailers Ricardo Eletro and Via Varejo, already operate in these locations, but they are still exceptions.

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The favela with the highest concentration of large companies is Casa Amarela, in the Northeast state of Pernambuco, with 10 of the 22 large establishments found by the study. “Pulling local economic growth will generate improvement in all other areas of the favela, such as urbanism, health, job,” believes Cavaretti.

Who buys and who sells in the favela

Founder of Outdoor Social and specialist in communication strategy for the urban peripheries, Emília Rabello already worked with communication aimed at lower-income classes before creating the social impact business capable of providing assertive data and analysis on the economy and opportunities in these communities.

It bothered her that her expertise was only requested for government or charity campaigns. She understood that these people were a target audience of a multitude of areas of the economy.

I knew they were long-tailed (consumers), who had a lower average ticket (they spent less on each purchase), but that the volume (of business that could be generated in the end) would bring results. But it was no use talking to my clients, showing them pictures. I needed to bring them data and tools, provide studies and figures, which are very few in those territories

EMÍLIA RABELLO, Founder of Outdoor Social and specialist in communication strategy for the urban peripheries.

According to the Outdoor Social survey, restaurants, small markets, beauty salons, and clothing brick-and-mortar stores are the predominant types of businesses in these communities. According to Rabello, these entrepreneurs are “swimming against the tide” when analyzing the Brazilian economy’s current context.

While sectors such as civil construction, commerce, and services fired more than 30%, on average, of their staff in 2020, according to IBGE data, 89% of these businesses did not fire their employees during the novel coronavirus pandemic.

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For Rabello, this low percentage of layoffs in the favelas is due to two factors: these businesses have few employees, and they have a characteristic of solidarity that goes beyond the commercial relationship. “Whoever works is always a very close person, it is the nature of these businesses. They may reduce activities, but they don’t stop just to keep these relationships (alive),” she says.

To cherish the favela’s culture, with its signs and symbols, and bringing advertising and services into the urban peripheries, are some trends pointed out by Rabello for brands and companies that wish to sell their products and services to these consumers. Even with the strong expansion of e-commerce in Brazil and Latin American countries in general, those who live in communities report difficulties in obtaining trivial services such as ordering food via a delivery app.

When I place ads in a slum, I value that territory; I speak of the economic power it has. Our culture is not made up of a minority elite (and that needs to be highlighted)


Translated by Fabiane Ziolla Menezes