The survey cross-checks the results of retail sales volume calculated from the Monthly Trade Survey conducted by the Brazilian Institute of Geography and Statistics (IBGE), with population mobility data recorded by Google Mobility. This shows that the states with the largest recovery in consumer circulation were also those that also showed the best pre-pandemic retail performance.
In the northern region of the country, retail sales in June were at a higher level than in February 2020, before covid, in five of the seven units of the Federation. These are: Roraima (17.1% above the pre-pandemic level), Pará (15.7%), Amapá (14.6%), Amazonas (6.2%) and Rondônia (3.2%). These conditions also stood out in the movement of people in consumer facilities, according to data from Google Mobility.
Consumer movement increased by 39% in Pará compared to the pattern seen at the beginning of 2020. In Roraima, the increase was 34%.
‘People were slowly coming back’
Business couple Oberdan Falcão, 36, and Fabíola Nogueira, 35, noticed the business improvement. They have a sporting goods store in the São Vicente district, near the center of Boa Vista, the capital of Roraima.
“During the pandemic there were restrictions, I think we were closed for two or three months, there were isolation“, reported Fabiola. “Sales dropped very, very much. As the vaccine was administered, the staff slowly returned. Now we have recovered, there are even more customers than we had before.”
The facility – which was named after the couple’s daughter, Andressa Sport Center, and has been around for five years – currently earns about 30% more than before the pandemic. Sale has as its main uniform a football team. The article with the most exits is the jersey of the Flamengo club from Rio de Janeiro.
“Today we sell 40 to 50 Flamengo shirts a month, sometimes even more. We used to sell about 25 shirts a month,” said Fabíola.
According to economist Fabio Bentes, the author of the CNC study, the states of the Northern region have less access to electronic commerce, and the government’s issuance of additional revenue reaches local merchants more directly.
“Whenever you stimulate the economy through income transfers, in these countries it’s like people are pulling their feet out of the mud. In Rio de Janeiro and São Paulo, it doesn’t make much difference, because those resources are diluted into an economy that is more In the north and northeast, even and with high inflation, if you free up resources, historically, this behavior tends to stand out. At the time of Bolsa Família, this also happened,” explained Fabio Bentes.
In the national average, the amount sold in retail reached June at a level 1.6% higher than before the pandemic. But São Paulo’s retail performance was 0.4% below pre-covid, while Rio de Janeiro was still 5.6% below.
The CNC study also showed that São Paulo and Rio de Janeiro are the last units of the Federation in the scale of consumer recirculation. In São Paulo, the movement of people in commercial facilities is still 12% below pre-pandemic levels, and in Rio 9% below.
The strongest remote work in the Southeast
Bentes explains that in the Southeast, in addition to e-commerce becoming more widespread, the pandemic has changed work habits and consumer circulation. For example, workers in São Paulo and Rio de Janeiro are more likely to telecommute. This reduced movement through the central areas of capital cities.
“For those states, it will take longer to get consumer traffic going again, which isn’t holding back retail growth, even in the face of this new reality, the e-commerce group says,” Bentes reflected.
The CNC economist reminds that the evolution of retail sales varied depending on the consumption conditions of the population, as well as the severity of the health crisis.
IBGE data show that the most intense losses in sales compared to the level of February 2020, in the pre-covid period, followed the phases of the re-emergence of the pandemic. This happened in the second wave of cases, in the first quarter of 2021, and in the arrival of the Ômicron variant at the end of last year.
Since then, there has been a recovery trend. This movement was also helped by the measures of injection of funds released by the government. This was the case with extraordinary payments from the Severance Fund (FGTS) and the anticipation of the 13th salary of retirees and INSS pensioners. At the start of the second half, the increase in value and reach of Auxílio Brasil is expected to boost retail sales.
For Isabela Tavares, an analyst at Tendências Consultoria Integrada, the incentives mainly favor food sales. More precisely, it would improve the results of the supermarket segment. This is because the beneficiaries of the government cash transfer program are the most vulnerable families.
“This ends up helping the budget of low-income families, both for debt repayment and consumption and direct consumption,” Isabela said. “The impacts should be stronger in these northern and northeastern regions,” confirmed the economist, given that the mentioned regions have a larger share of Auxílio Brasil’s user population.
Additional features against inflation and interest
According to the Ministry of Citizenship, the Northern Region concentrated about R$1.44 billion in Auxílio Brasil payments in August. It reached 2.4 million families in seven states. The result means 274,100 concessions more than in July. The North is also the region with the highest average ticket, R$613.21, compared to the national average of R$607.85. Acre has the highest average value in Brazil: R$629.75 for each family.
In Roraima, the average ticket is R$ 622.35. The Ministry clarifies that the average value in the region is higher because it is added to all additional income, such as scholarships for sports scholarships, scholarships for scientific initiative and involvement in rural production.
In the Northeast region, the government estimates that Auxílio Brasil will reach 9.4 million families in August, for a total of R$5.63 billion in payments. The average value per family in the region is R$ 607.86.
“This retreat (in retail sales) that comes from the north of Brazil also, in a way, helps explain why trade is still growing weakly this year,” said Fabio Bentes, recalling that the region has a modest weight in forming the national average. “Not to mention economic factors that are not favorable: high inflation, still high unemployment, high interest rates,” he added.
CNC expects retail sales to end 2022 with sales volume growth of 1.7%. Tendências Consultoria Integrada predicts a 1.8% advance this year, followed by a 1.1% expansion next year.
“In the second half (of 2022), we expect retail sales to slow down,” predicted Isabela Tavares.
If the privilege tends to the sale of necessary items, the increase in the interest rate reduces the scope for purchasing consumer goods through credit, especially permanent ones. The lingering effects of monetary policy, which raised interest rates to stem inflation, are adding to the already high levels of debt and default among Brazilian families.
The scenario, which also includes the uncertainties of the election period, should turn into a loss of breath for the retail trade at the transition from the third to the fourth quarter of this year. The assessment was made by Rodolpho Tobler, coordinator of the Trade Survey at the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre/FGV).
“Trade has expectations that, in the short term, it will have a favorable result, but, in the medium and long term, when looking more towards the end of the year, macroeconomic factors should prevail for a more negative variation, a certain slowdown of the economy”, projected Tobler.
The trade confidence index calculated by Ibre/FGV fell in July by 2.8 points, to 95.1 points, after two consecutive increases. According to Tobler, the decline was driven by a worsening perception both in relation to the current state of business and in expectations for the coming months.
Although recent government stimulus measures could sustain demand for a few more months, business owners are cautious about the future. They target a scenario of high inflation and interest rates, with low consumer confidence.
“The trade still has some caution towards this horizon of the second half of the year,” concluded Tobler.