E-commerce projects record share of retail sales with Black Friday despite slower growth | Black Friday 2021

According to the Brazilian Electronic Commerce Association (ABComm), Online sales already account for more than 11% of the country’s retail sector, with participation projected to reach a record 18.7% in November of total retail sales in Brazil.

The previous record was set in November last year, when the rate reached 14.4%, with the impact of Black Friday and the second wave of the coronavirus that imposed restrictions on physical stores, forcing companies to digitize more and also attract millions of new online shoppers. Before the arrival of the Covid-19 pandemic, the share of Brazilian e-commerce in retail sales never exceeded 10%.

Confirmed expectations, the share of e-commerce in Brazilian retail sales should increase from an annual average of 9.6% in 2020 to 11.6% in 2021. ABComm forecasts annual segment revenue growth of 18.5% in 2021, after a jump of 68% in 2020.

Even with the greater movement of people in cities and the lifting of restrictions on physical trade, representatives of the sector estimate that e-commerce will set a new record this Black Friday, which is favored by the increase in the number of virtual stores and the continuous entry of new consumers.

This year, the traditional date for retail sales takes place on November 26.

“Black Friday 2021 will be better than last year’s because we have a larger number of stores available for online sales and the entry of consumers who, due to the pandemic, could not consume in a traditional store, went online and had a good experience, and even mandatory,” says Rodrigo Bandeira , vice president of ABCom.

The association estimates that more than 20 million consumers made an online purchase for the first time after the pandemic, and that since 2020, more than 160,000 virtual stores have been created in the country.

High inflation and expensive dollars limit consumption

ABComm predicts a 25% increase in e-commerce revenue for this edition of Black Friday, compared to last year. In 2020, Black Friday sales totaled BRL 5.1 billion, up 31% from 2019, according to NeoTrust/Compre&Confie.

Amid high inflation, a dollar above R$5.50 and still high unemployment, Brazilians are estimated to spend less on Black Friday this year. THE the association predicts an average value of 620 BRL per Brazilian, below the average ticket of 668.70 BRL in 2020..

For consolidated e-commerce results for 2021, ABComm continues to forecast a double-digit growth rate (18.5%), albeit lower than the 34% projected at the start of the year.

“There has been a reversal of expectations. The assessment at the beginning of the year was more optimistic,” explains Bandeira, citing the impact of the high dollar and gasoline on transportation costs, inventory planning and sector sales. “The fuel problem has affected freight, and logistics is still something that makes trade costs too expensive and slows down the expansion of the sector.”

Research by the National Confederation of Trade in Goods, Services and Tourism (CNC), based on data from the Federal Tax Service on electronic invoices, points out that real revenues from e-commerce increased by 47% in the first half of the year in a year-on-year comparison. However, the entity estimates that growth will slow to a rate closer to 30% in the 2nd half of the year.

“The barriers to personal consumption are gradually being removed and this is taking away the pace of online retail a little bit. But we cannot ignore the fact that in an environment of inflation with a rate of 10% and rising interest rates, the trend is for online retail to have a little more difficulty in maintaining the pace it has had until then,” says CNC economist Fabio Bentes.

He reminds that the exchange rate also raises the prices of durable consumer goods, such as electronics and white goods, which normally lead the way in online sales.

In a report released this week, XP weighed in “Surge in prices is a challenge for deep Black Friday discounts and the industry doesn’t seem willing to share the bill” due to chain imbalance, very tough competitive scenario and deteriorating economic scenario.

Ebit/Nielsen research shows that the percentage of online consumers intending to shop online on Black Friday has fallen from 91% in 2020 to 89% in 2021.

Another survey commissioned by Google with the consulting firm Ipsos also points to more restrained spending this year. According to a survey conducted in September, 64% of Brazilians intend to shop during Black Friday. The survey identified two different profiles: more cautious, representing 44%, and more open, with 56%.

Among the most cautious 44%, 25% said they are saving for future needs, and 19% intend to buy only if they come across a big discount. Of the 56% who said they were more prepared for Black Friday, 37% said they were saving up to shop on sale, 13% intended to buy a lot of things because they didn’t buy them last year, and only 6% said they wanted to use it to buy more gifts.

The sector estimates that Christmas will again be personal for many families this year, but with the exchange of souvenirs instead of gifts in many cases, as Brazilians’ incomes are eroded by inflation. IBGE data show that the real average income of workers fell by 10.2% in 1 year.

“We all want this year to be a personal Christmas and that encourages the purchase of gifts. However, it is clear that the crisis has an impact and what was a gift until then can become a souvenir,” says Bandeira.

However, the director of ABComma estimates that, unlike previous years, the volume of Christmas shopping should increase in December, including last-minute orders, due to the dispute between large retailers over shorter delivery times.

“Deliveries were much faster. The consumer has already adapted to receiving within the immediate need that he needs. He knows that he can progress to certain dates closer to buying the product online, which he will receive,” he says.

Persistent inflation, a water crisis, still high unemployment and heightened fiscal and political uncertainties ahead of the 2022 election year have worsened the outlook for Brazil’s economy. The financial market revised down the GDP growth projections (gross domestic product) and raised the estimates of inflation and basic interest rates (Selić). The current projection for the GDP result for 2021 has increased by 4.94%, after a decline of 4.1% last year. For 2022, the market lowered the growth forecast to 1.20%.

After disappointing data on trade results in recent months, the CNC lowered the expected growth of the Brazilian retail sector in 2021 from 4.9% to 4.6%.

Below, see the 10 categories with the highest purchase intent on Black Friday, according to Google/Ipsos research:

1. Clothing (62%)
2. mobile phones (40%)
3. Books and accessories (38%)
4. Footwear (33%)
5. Personal care (27%)
6. Computers (26%)
7. food (23%)
8. Furniture (19%)
9. Small household appliances (17%)
10. televisions (16%)