Neutral’s 2024 sales surge with 21% YOY increase
Neutral continues to lead in the duty free and travel retail industry by constantly improving the shopping experience through store renovations and activations
Neutral concluded 2023 with outstanding results, with CEO Marcelo Montico noting a remarkable 37% increase compared to the previous year. “Not only did we meet our expectations, but we exceeded them significantly,” he says. The company's impressive performance was reflected in customer experience surveys, which continue to influence daily operations.
Neutral is also demonstrating strong performance in 2024, showing a 21% increase over 2023 as of the end of May, slightly surpassing projections. This growth has been supported by positive macroeconomic changes in Argentina, resulting in lower prices for products and services, which has revitalized tourism. Additionally, political and economic stability in Brazil has maintained the local currency's relative stability, with fluctuations not exceeding 5% over the past six months.
The historic floods in southern Brazil last month posed significant challenges, however. With 500,000 people evacuated and approximately 2.2 million affected, “Most of the roads connecting Rio Grande do Sul with the Uruguayan border were closed, negatively affecting consumer sentiment and, consequently, sales,” Montico says. Although the situation is improving, it has slowed cumulative annual growth.
Innovative strategy
Neutral continues to lead in the duty free and travel retail industry by constantly improving the shopping experience through store renovations and activations. Montico states: “We capitalize on key dates throughout the year to create unique experiences that blend entertainment with the cultural richness of the region.” Events during Carnival, Easter (pictured below) and Christmas are particularly well-received, he adds.
The brand’s innovative approach has resulted in a strong connection between the retailer and its customers. Montico notes, “On our social media we proudly say ‘We are Family,’ and this sentiment is echoed in the satisfaction interviews we conduct.” Leveraging this bond, Neutral introduced the “Worth the Visit” campaign, which supports various cross-promotions across different brands and categories.
Neutral’s Shop-in-Shop (SIS) concept further enhances the shopping experience. The top-performing brands available exclusively at Neutral by Luryx, include MAC, Pandora and GAP. Pandora caters to a smaller but affluent customer base, ranking in the top 3% of highest-value transactions. GAP’s broad appeal across genders, ages, and socioeconomic segments allows Neutral to cater to diverse clothing needs. Prestigious brands such as Dior, Chanel, Lancôme, Adidas, Tommy Hilfiger and Nike also offer personalized spaces, enhancing the value proposition. These exclusive brands provide regular customers with an additional reason to choose Neutral.
The top-performing brands, available exclusively at Neutral by Luryx, include MAC, Pandora and GAP
Thoughtful spending
According to Montico, Brazilian consumers are showing more thoughtful shopping behaviors, often conducting prior analysis based on social media content. “While some customers prioritize new releases or exclusivity, often disregarding savings, the majority remain highly sensitive to savings compared to their local market,” notes Montico. These consumers aim to maximize their US$500 allowance by purchasing items with at least a 20% discount.
With this shift toward more analytical and less impulsive buying patterns, it is essential to anticipate customer needs before they arrive at the store and determine the value proposition that will resonate most effectively. In the past, portfolio analysis relied heavily on in-store customer feedback; Neutral has now adopted artificial intelligence to identify preferences based on customer activity on their platforms, forums and social media.
“Technology is revolutionizing retail management, enabling us to better understand and meet the needs of a more discerning customer base,” Montico says. This integration of technology allows Neutral to stay ahead of consumer trends and preferences, ensuring a tailored shopping experience that meets the evolving demands of today’s travelers.
AI integration
Neutral has embraced AI to achieve its full potential, moving beyond simply keeping facilities clean and well-lit. “We needed to exceed expectations to delight our customers,” says Montico. Since the integration of AI began in mid-last year, the company has seen significant improvements in conversion rates and average ticket values.
One specific AI application being applied by Neutral is robotic social media monitoring in Brazil. This helps identify trends and preferences for new brands within each target audience segment, allowing Neutral to identify the most desired brands in each niche, driven by influencer preferences. Additionally, a specialized AI tool has been adopted to predict future demand and suggest inventory positioning for each brand, utilizing various variables and an algorithm with impressive accuracy.
“We believe that [we] retailers must increasingly integrate AI into our daily operations,” says Montico. “This is not to replace our employees, but to enhance their efficiency and effectiveness.” By leveraging AI, Neutral is better equipped to understand and respond to customer needs, ensuring a superior shopping experience that consistently exceeds expectations.
Fundamental pillar
Neutral has significantly increased its use of AI in marketing, plus predicting trends and future demand. “I believe what we do today may be vastly different from what we will do in the medium term, given the meteoric evolution of this technology,” shared Montico. Optimizing technology is now a fundamental pillar of Neutral’s strategy.
Reflecting this commitment, Neutral has established a new department within IT called “Robotic Processes and AI,” dedicated to fostering creativity and encouraging the development of new tools. “For us, optimizing technology is a fundamental pillar of our company strategy,” says Montico. By investing in this new department, Neutral aims to stay ahead of technological advancements, to continually enhance efficiency and effectiveness, leveraging AI to better understand and meet customer needs.
Earning trust
Neutral stands out due to its steadfast dedication to quality, credibility and trust. “First and foremost, Neutral is part of an industry and a channel where all our colleagues have done an excellent job in building credibility and trust over the years,” says Montico. With 37 years in the industry, Neutral has consistently delivered quality products, building a solid reputation and showing a deep understanding of the responsibility that comes with earning their customers' trust and business.
In a vibrant and thriving industry, Neutral remains a most recognized and beloved brand. Montico states: “When customers decide to embark on a shopping trip to the border, visiting one of our eight stores is a must.” Neutral's wide presence in border cities enhances its value, allowing customers to buy an item in Chuy (pictured below) and exchange it in Rivera if needed, for example. The “360” program ensures that customers traveling the 500km border can always rely on Neutral to meet and exceed their expectations.
Environmental commitment
Neutral is gearing up for exciting developments in store expansion and sustainability initiatives. In the latter half of this year, the retailer plans to partially expand two stores, and by the first half of 2025, they will open a new store in one of the fastest-growing cities, showcasing a robust growth strategy.
Neutral is actively incorporating sustainability into its operations. Montico states: “We are the only operator in the region with ISO 14001 certification, which verifies the implementation of an environmental management system across all our processes.” This certification highlights Neutral’s dedication to environmental responsibility.
As part of its global commitment, Neutral will start installing photovoltaic panels in all large-format stores (over 1,000 square meters) by the end of this year. “Their electricity consumption can be entirely generated from clean, green, and renewable energy sources,” says Montico This initiative is a key component of Neutral’s broader sustainability strategy, reflecting a forward-thinking approach that balances expansion with environmental stewardship.
