by Igor Carvalho and Leda Cavalcanti
This year Christmas sales may not match the performance dreamed by retailers, but will help to minimize the consequences of the economic downturn over the past few months, which put consumers away from stores. Even with sales projection below the result presented in the last decade, marked by a strong growth of trade, the end of the year comes as a gift from Santa Claus for all tenants. Besides Christmas, Black Friday promotional event incorporated in the retail calendar, taking place on the last Friday of November should also compensate for the poor performance of trade in 2016.
In the assessment of the National Trade Confederation of Goods, Services and Tourism (CNC), the indicators that affect the country’s consumer purchasing power should also reflect the results of Christmas. According to forecasts of the organization, the sales revenue in the period will be R$ 32.1 billion by December, ie 3.5% less than 2015. The contracts will also fall, with the admission of temporary 2.4% less compared to last year. About 135 million jobs will be offered where furniture and household appliances account for 8.3% of these vacancies.
“Sales will fall primarily to the same factors that have made 2016 a difficult year for trade. Given what was Christmas last year, when the credit was expensive, very high dollar rates and unemployment growing rapidly, in 2016, the date must present less fall. Hiring temporary labor is a bet for the retailers at the end of the year. They know that sales are not good, but not as bad as the previous year, “says Fabio Bentes, CNC economist. Even with seemingly negative situations, Christmas will be made at the time the confidence of Brazilians and business begins to improve.
Last September, Getulio Vargas Foundation identified increase of 1.3 points on the positive expectations of consumers (80.6 points) from the previous month, reaching the highest level since January 2015 (81.2 points). The industry showed similar behavior: its confidence index was up 2.1 points, after a pause in August, reaching 88.2 points. In the retail case, the CNC identified the advance of 1.5% in the confidence of tenants, which reached 93.5 points. Compared to September 2015, the increase was 14.8%. The picture is not in optimism level when the index reached the house of 100 points, but reflect less pessimism. Despite the gradual improvement in expectations, the warning signal has continued to soar. The delay for effective macroeconomic recovery, particularly employment and economic situation of families, is dragging caution, especially consumers.
The scenario may not show a decisive recovery, with reversal of the negative performance curve for the positive, but there are indications that the fall begins to stabilize. According to the Institute of Sales Background Index for Retail Development (IDV-IAV), the market should decline through November, down 3.6% in September, 3.3% in October and 0.7% in November. In the case of durable goods segment, the most sensitive to the recovery of consumer confidence and the resumption of credit, the variation in the period is -3.45%, -2.5% and -1.84% respectively. Other indices show similar behavior and has shown results out of the red.
In August, the trade movement grew 1.1% from the same month of 2015, according to the Credit Protection Service Center (SCPC Boa Vista), which tracks retail performance from the negative results of queries made by retailers before closing a deal. It is the first positive value in 16 months and draws attention for being supported by furniture and household appliances, which rose by 4.4% between July and August, seasonally adjusted. Even without considering seasonal adjustments, the accumulated change in 12 months was -5.6%. With the beginning of the reversal of the decline of this indicator, the market concern now is with the sustainability of this recovery. In the year, the change in the trade movement was -4.2% in the same comparison basis.
Consumers play an important role in this change of direction. The intention of household consumption, calculated by the CNC in September, recorded the highest monthly increase since 2010, an increase of 4.1%. The seven components of the survey had positive growth in the month, bringing the overall index of 72.1 points on a scale of 0 to 200. “There is a perception that the crisis is weakening slowly, with mild deceleration of inflation and gradual resumption of confidence of consumers and businesses, “said Juliana Serapio, economic advisor of the CNC. The fact that is holding back the economic situation of the Brazilians. Most families, 64% said that their level of consumption is lower than in 2015. The forward purchases fell 16.5% over the same period last year.
Even with the payment of the 13th salary, Brazilians are more likely to save. The monthly commitment of wages to pay debts is high, 43.7%, according to Central Bank data. Excluding real estate financing, debt reduction is lower. With this metric, the indicator is 24.9%. Survey of Fecomercio-RJ, made throughout the country in partnership with Ipsos Research Institute, showed that 68% of consumers said they did not pay any installment at the beginning of this semester. The reduction in the level of debt to pay can motivate households to consume in the coming months through improved reflexes of economic activity. A positive and definite change in the scenario, however, the market projects only in 2017.
The current economic situation should benefit mainly sales of Black Friday in the end of this year. Consumers are keeping an eye on prices. The value of the product will determine the motivation of purchase, especially among the middle class, so the promotional date should have greater compliance than in 2015. Preponderant in the e-commerce market, Black Friday has already been incorporated by physical retail. In the first channel, the forecast are estimated in R$ 2 billion this year, R$ 500 million more than in 2015. A study conducted by Google, with 800 Brazilian consumers, indicated that only 10% of them do not intend to purchase during the promotional action. Last year, this proportion exceeded 20%.
The average ticket purchases on Black Friday tends to be higher than the average sales in online businesses out of date. The average expenditure during the event is R$ 1,098. Compared to the sales performance throughout 2015 is more than double, revolves around R$ 450 to R$ 500. If not the current caution, consumption could be even higher on the day. In the survey of 15,000 people by Zoom, pricing comparison and product website, 74% said they would spend more on the event if it were not the time of economic instability. This scenario also contributes to that Brazilians are more attentive and more research before buying, so that 93% of respondents use price comparators and products. With this behavior, the virtual stores stand out over retail offline on Black Friday. According to the survey, 83% of people interviewed, believe they will find the best discounts online and 71% plan to do your shopping online.
“The expectation of high ticket-medium also changed this year because the date is very strong for electronic sale and, once again, the items in this category are the most desired by consumers. A category with products with higher value, research shows that half of the people interviewed intend to spend more than R$ 1,000, “says Thiago Flores, executive director of Zoom. Another fact revealed is that 66% of respondents want to take the time to anticipate their Christmas shopping. Last year, 57% had this intention. “It is not that a date jeopardize the other, there is an anticipation to take advantage of discounts that are very strong. Sometimes consumers do not intend to purchase a product for gift, but the price ends up generating an opportunity, “he adds.
The director of Zoom believes that in e-commerce during the Christmas period, smartphone sales are expected to top the list of desires of consumers. “They keep on top of research during the year.” In the segment of durable goods, Thiago also bet on TV sales. In the ranking of 2015, the most wanted products by consumers include white line items such as air conditioning and refrigerators, video games and tablets. Business opportunities exist. For this reason, the industry is prepared with wide range of products that meet different tastes and budgets
Even with seemingly negative situations, Christmas will be made at the time the confidence of Brazilians and business begins to improve.
The current economic situation should benefit mainly sales of Black Friday by the end of this year.
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