Challenges and advantages in retail at 2021 Christmas

by Leda Cavalcanti

Retail is starting to show good signs that there will be a recovery of the halted demand this Christmas, says the economic advisor at FecomercioSP, Altamiro Carvalho. “It is a more sensible scenario, with some positive factors such as the 13th salary that in 2020 was advanced by most companies, the vaccination numbers, which are restoring consumer confidence, and the increase of credit offer.”

In parallel, even with the increase in formal labor, there are negative points, such as high inflation, with the consequent erosion of purchasing power, and the lack of expectation of income increase. Furthermore, in 2021, commerce will have competition from activities such as tourism. “With the pandemic, people stopped traveling, there was no leisure, they destined the money for the consumption of goods. There will be no leftovers”, says the expert.

“This Christmas also tends to be the recovery for the physical store. “It is essential for some activities and will take its leading role in consumption.”

Despite this, the expectation is positive for Christmas and better than 2020, says Altamiro. “The pace of growth will be lower than in the first half of 2020. The appliances sector should not exceed the 21% increase in sales achieved in 2020, which is a very strong base. After a year and a half of positive cycle, it will enter a phase of equilibrium. If retail grows from 2% to 3% this semester and it will end the year with an 8% increase in sales over 2020.”

1st place

Christmas is undoubtedly the most relevant date for retail, even considering the good sales of Black Friday, says the economic advisor. “Christmas is sustainable, there is the tradition of exchanging gifts and, mainly, the 13th salary. The date is very comprehensive and, this year, there should be greater balance between the different activities. The real estate market is booming, and this also favors the furniture and decoration segment.”

This Christmas also tends to be the recovery for the physical store. “It is essential for some activities and will take its leading role in consumption. Of the total retail sales in the State of São Paulo, e-commerce represents between 6% and 7% and shopping malls, 5%. Less than 10% of the 5,562 municipalities in São Paulo have a shopping mall. In small towns, street commerce predominates”, explains Altamiro.

Marketing and promotion are essential to encourage sales, and this includes partnering with the financial system and offering advantages such as discounts on shipping and items that have been in stock for longer, says the expert. “It is preferable to sell at cost price to seek maximization, negotiate terms and prices with the consumer, and encourage them to go to the store. Having products on consignment can also be a great strategy this Christmas.”

4th quarter

The most important period for appliances, the so-called golden quarter concentrates something around 1/3 of the sector’s annual revenue, encompassing Black Friday and Christmas. “Over the years, the first date grew, and the second became complementary. Its focus is to manage opportunities by categories and activate different marketing and sales actions to optimize results for this golden quarter”, says Fernando Baialuna, Business and Retail Director at GfK.

“The best experience occurs through the integration of physical and online environments. The figital is a condition to boost sales.”

The forecast is that sales growth in the period will be due to the average increase in products anticipated by price transfers due to higher costs in the distribution chain and exchange rate variations. The challenge for industry and retail is to stimulate sales in a country with great social differences. “There is a historically suppressed demand for a series of categories, but the poorest suffer from the reduction in income”, explains Fernando.

This year, the leading role will be for items with greater technological appeal, such as smartphones, televisions, and notebooks, says the director of GfK. “It is an opportunity for industry and retail to work on the mix and offers of these categories to optimize margins. In addition, whether for seasonal appeal or the act of giving, some categories are characteristic of Christmas, such as fans and tablets.”

Premium products

Premiumization is a continuous phenomenon and an opportunity in Brazil, as most of the population still seeks access to better technologies. In the current scenario, with the loss of income, it is necessary to consider that the effects of the crisis modify the consumer’s perception of value, explains Fernando.

“In this context, alternatives emerge that reflect the desire of the B class to buy a premium product at a more affordable price, which is possible when the company prioritizes some features over others. In the case of classes C and D, the downgrade is inevitable, and it is precisely at these times in history that new brands appear with alternative and more accessible prices.”

Optimizing the mix is a major challenge, it must be thought of based on the purchase journey and not just channel segmentation. “The best experience occurs through the integration of physical and online environments. The figital is a condition to boost sales. No less important is clearly communicating the availability of credit and offering certain conditions that stimulate demand. Promotions are back as a fundamental condition to attract consumers with lower disposable income”, says Fernando.

E-commerce sales

The channel has an optimistic projection for this Christmas, says Rodrigo Bandeira, vice president of the Brazilian Association of Electronic Commerce (ABComm). “Even in the face of the not-so-favorable scenario, the exchange rate and the dollar, the growth expectation on that date is double-digit, that is 18% compared to the previous year. Billing should reach R$ 16.684 billion.”

“This will be the Christmas of the families’ reunion, there will be closer, we must not forget that; and this situation will have an impact on the purchase behavior.”

Historically, the last quarter is good for sales. People are more likely to buy. “This will be the Christmas of the families’ reunion, there will be closer, we must not forget that; and this situation will have an impact on the purchase behavior. In addition, the 13th salary always helps, even considering that this year it will have mixed use, part of it will go towards paying debts”, says Rodrigo.

Smartphones, items related to connectivity, televisions and more powerful computer products are traditionally the most sought after in e-commerce, and companies must prepare themselves, says the vice president of ABComm. “The challenge of retail is permanent; it is one of logistics and fast delivery. We need to work towards inclusive maturity, giving consumers confidence to purchase products on the internet. We still have a long way to go.”

Brands must prioritize actions

SenacRJ retail consultant, engineer Luiz Antonio Secco discusses in his new book “A alma, o coração e o cérebro do varejo” (The soul, heart, and brain of retail) the strategies and techniques retailers can adopt to maximize their results, as he tells in this interview.

“There is no stronger rational appeal than the emotional one. But in times of crisis, price and relevant advantages must always be emphasized”.

Soul, heart, and brain form a set of strategies?

Luiz Antonio Secco – Soul is brand building. Heart is the relationship with the customer. And brain is the management of the company. They are separate factors, but a big set, which is the brand, above anything else. For this Christmas, brands must prioritize their actions, it is not possible to do everything at the same time in such a challenging year.

How to select priorities?

LAS – The priorities, which vary in importance according to the segment and size of the retailer, are as follows:

– Plan sales conservatively.

– Do not buy more than the planned open to buy.

– Focus on e-commerce, marketplaces, live commerce.

– Don´t leave the target audience, resist the temptation to expand the assortment.

– Lots of social networking, especially Instagram.

– Train teams in customer service and brand pride.

How to attract consumers to the store and gain their loyalty?

LAS – It must attract the consumer with consistency in the product/marketing/sales tripod. The main marketing strategies are to prioritize the categories and items with the highest turnover and talk about them constantly on social media.

Should consumer appeal be more emotional?

LAS – There is no stronger rational appeal than the emotional one. But in times of crisis, price and relevant advantages must always be emphasized. As I said, it is necessary to prioritize the best-selling items, reduce the variety of the assortment, increase the depth, total niche in the categories and products that are most in demand, and promote them relentlessly through social media and through the sales teams.

Source: Revista Eletrolar News #145