A new journey for industry and retail

By Leda Cavalcanti

One of the challenges the industry has to overcome in 2021 is to innovate by offering premium products at an affordable. And the retail space has yet another, just as important, which is to offer consumers credit and payment terms, as indicated by GfK’s analyzes and evaluations over the first quarter of 2021.

“In the period, there was a drop in the sale of electronics in units, despite the very significant revenue sustained by the increase in the average price. This leads to conservatism in the forecasts for this year”, says Fernando Baialuna, director of retail & retail services at the company.

There are big differences between 2020 and 2021. The middle and upper classes will continue to consume, but the less favored classes will have more difficulties, because the emergency aid covered 70 million people last year, but now it will cover 40 million, with the aggravating factor of a lesser value than last year. The pent-up demand continues as an opportunity for future sales, mainly in classes C and D, but the challenge is to stimulate consumption in scenarios of lower income and purchasing power. As an example, laptops have a potential demand of 16 million units over a three-year horizon.

The market is going through an interesting moment for the consumer, says Ricardo Moura, head MCI Brazil of GfK.

“Consumers are no longer so interested in brands; their loyalty has decreased. They are focused on the price of the product, especially in the case of small appliances. Class C did not put a lot of money into online shopping, but in 2020, the main categories had an increase in sales in this channel. The search for price, generated strong pressure on physical stores, which tends to grow for small and medium retailers. The consumer will give up quality for price.”

New outlook

Clearly, aspirational products continue to have a lot of value. There is a greater search for premiumization, but companies will have to look for alternatives to defend their profit margin. In the case of smartphones, for example, the consumer wants a powerful camera, but the other features will not be at the same level of quality if the price must be lower. Creativity will be essential in the industry’s production process, as well as for retailers to optimize their mix. It is a new business journey.

Clearly, aspirational products continue to have a lot of value. There is a greater search for premiumization, but companies will have to look for alternatives to defend their profit margin.

On the other hand, the consumer is much more attentive and informed, highlights Fernando. “The outlook is more conservative and challenging. We are dealing with a situation that has no precedent. There is the macroeconomic scenario in the country and, consumer insecurity in relation to maintaining their jobs and income. Optimism is directly related to sales behavior in the home appliance and electronics sector.”

There is an additional point at this moment, explains Ricardo. “The upper middle class will not catch a breath for consumption in 2021, the peak was in 2020. This year is for replacement. The purchase will take place in case of product breakdown. The purchase will be fluid between the physical and the online. The process will continue to go hand in hand – the so-called figital. Those who did not make this integration lost ground.”

Eletrolar News Magazine 142
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