First and foremost, it was e-commerce that drove retail sales. Next come furniture, appliances and building materials. And now it’s fabrics, garments and apparel – the “ugly duckling” for most of the pandemic – to take the lead in retail sales. Trade grew 26.2% from the first five months of 2020 and 2021, according to a survey by the Brazilian Institute of Geography and Statistics (IBGE).
XP retail analysts believe that commerce will be a major beneficiary of the move to reopen and recover the economy. “In addition, pent-up demand and the ‘buy for revenge’ trend are positive risks to business results in the coming quarters. Companies in the sector have already posted a strong performance in the second quarter, boosted by commemorative dates such as Mother’s Day and Valentine’s Day.
Economist Alejandro Ortiz Crucero, of Guide Investimentos, points out that the flexibility of activities after the shock of the second wave of infections has given new impetus to household consumption, which has also been supported by the reissue of important programs tax, such as emergency aid and BEM, the employer-driven income and employment maintenance program. “It should be remembered that the monetary expansion of the CB last year favors, in a lagged way, a certain effect on the performance of sales this year”, he quotes.
Another factor that helps, according to him, is the high savings rate as a proportion of GDP. This level reached the historic level of 20.6% in the first quarter. “This cushion of liquidity is what supported consumption in a more restricted budget support”, he underlines.
Which should also post a good performance in the coming months, despite the upward trend in prices, is the retail trade of fuels and lubricants, which still has a decline of 4.3% over the 12 months ended in May, according to IBGE. In May, according to the National Petroleum, Natural Gas and Biofuels Agency (ANP), sales by distributors at gas stations were down compared to the same month in 2019, before the pandemic.
“With fewer and fewer restrictive measures, the mobility of people tends to increase,” explains Fábio Bentes, economist at the National Confederation of Commerce (CNC).
Retail pulls industry
The segment that stood out the most in the trade is that of furniture and household appliances. In the 12 months ended in May, sales were up 18.9% compared to the previous period, according to the IBGE. And this performance was reflected in the industry. The production of furniture increased by 15.1% and that of household appliances by 29.9%.
The president of the National Association of Manufacturers of Electrical and Electronic Products (Eletros), Jorge Nascimento, says a new domestic scenario has been created with the pandemic and social isolation. “People have stopped traveling and going to restaurants. There was more money left to buy items for the home, which became an environment for study, work and social interaction.
Data from the Manaus Free Trade Zone (Suframa) and the Secretariat of Foreign Trade (Secex) shows domestic sales and imports of microwaves increased by 11.5% compared to the first four months of 2019 and 2021; splits, 26.5%, and conventional air conditioners, 10.2%.
Another segment that has stood out in commerce is pharmaceutical, medical, perfume and cosmetic items, whose commercial sales increased 13.9% in the 12 months ended May, compared to the previous year. previous period, according to IBGE data.
The Brazilian Association of Personal Hygiene, Perfumery and Cosmetics (Abihpec) attributed the performance to strengthening habits and personal care during the pandemic and, more recently, opening up trade in most Brazilian cities. In the first four months, sales grew 5.7% compared to the same period in 2020, the entity said.
The trend is expected to continue into this second half of the year, despite high unemployment and rising inflation. “With the increase in the number of people vaccinated, business activities are expected to return more and more to normal, which can help to maintain and enhance the performance of the sector. The pandemic period has also served to consolidate, in front of the consumer, the essentiality of the sector of personal hygiene, perfumery and cosmetics ”, specifies the entity.
Trend for the coming months
Analysts believe that the pace of retail trade should remain strong in the coming months. In the first five months of the year, it recorded a 6.8% expansion in sales compared to the same period last year. “We maintain our expectation of a more solid recovery in economic activity from the second half of this year, assuming a more advanced stage of vaccination”, assesses the MUFG Brasil bank.
Despite the upward trajectory, retail analysts from XP Investimentos point out that the pace of growth should be more moderate in the second half of the year, with household consumption tending to be proportionately stronger in short-term services.
Two other factors that should influence, according to CNC Bentes, are high inflation – in the 12 months ended in June, the IPCA closed at a high of 8.35%, according to the IBGE – and the rise interest, which should make credit more expensive.
The economist stresses that the panorama is more complex and tends to slow down the pace of growth. But even so, the industry’s expectation is to end the year with an actual (after inflation) increase of 4.5% in sales, the biggest increase since 2012.
The high price scenario worries Nascimento of Eletros. “Much of the input chain has seen sharp price increases, such as steel and packaging. The industry’s goal is not to deliver expensive products. To do this, companies renegotiate with suppliers and change processes.
There are also concerns about the semiconductor supply chain. According to the executive, the problem escalated from May. “Turned on the yellow light. “
Change of course in trade
The crisis triggered by the pandemic is forcing a change of course in retail, which must become increasingly digital. The CNC economist stresses that there has been an acceleration in contact with cash.
“If before the pandemic it was an alternative channel, now it has become fundamental. But there is still a long way to go, since sales exclusively online only represent 6% of activity, ”Bentes estimates.
One company that accelerated digital transformation was Bibi, of Rio Grande do Sul, which plans to open 32 stores this year, including 20 in Brazil. The children’s shoe brand grew 151% last year in digital sales in its own channel, via e-commerce, and 207% in the online network, exploring different platforms.
The company has expanded its sales possibilities, using technologies such as WhatsApp: the customer talks to the seller through the network, selects the products available through an online catalog and receives a personalized suitcase with the shoes at home. After choosing the products, a payment link is generated and the bag is returned with the options that were not selected.
This is the third report in the “O Brasil que Grows” series, which showcases some of the most advanced industries in the country. Follow the series on this link.