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Don’t get me wrong, sales of luxury items are well and kicking in Brazil. What has changed is where Brazilian are buying.

Once upon a time, not that long ago Brazil got (in)famous due to Daslu, a mega luxury store that sold from Gucci dresses to helicopters on a humongos mall that was almost all closed to anyone who was not a customer. Its owner, Ms. Eliana Tranchesi is from a wealthy family from Sao Paulo and her mother used to bring luxury items from her trips aboard and sell them from her living room to her closest friends. Later on, Ms. Tranchesi grew Daslu to its mega store status (we are talking about 60,000 square feet).

Then in 2005, Eliane was indited by the Brazilian government for being part of a scheme that brough all these luxury imported goods without paying its proper taxes (note to readers: Brazil has one of the highest level of these type of taxes in the world and of course the local government takes it very seriously). Ms. Tranchesi and her brother were arrested (and then appealed and were realeased) and Daslu’s debt with the government  is around U$ 300 million.

Daslu has declared banckrupcy while Ms. Tranchesi searches for new investors. The Daslu space now belongs to the Iguatemi group (which is a family enterprise that includes many high end shopping malls throughout Brazil). Daslu will soon move out and anchor the newest Iguatemi mall to be opened later this year (it will have about 15,000 square feet now).

Even though business is not as brisk at it once was, I do not think that this is just due to all the legal problems Daslu has been facing. Many of the international luxury brands it sells are now opening their own stores in São Paulo, therefore serving the same customer. Diane von Furstenberg, Chanel, Gucci, Louis Vuitton and Burberry, among others are investing highly in Brazil this year. Daslu needs to really reinvent itself inside and out so it can be relevant during Brazil’s current fashion boom.