Where the retail market is going to?

The beginning of Q4 is a moment when doubts on the consumer behavior in the end of the year converge to the likely forecasts for the next years. With special colors in today’s scenario, due to the likely impact in the Brazilian market of the consequences of the worsening of the global crisis.

In a much more pragmatic way, here goes some points studies and researches we’ve been doing have shown:



* The growth of spending and retail sales has been slowing down, due to the sum of two factors: falling consumer confidence, as a consequence aminly of the news on the delicate economic and financial situation of the European countries, specially; and the statistical effect of a much stronger comparison basis, due to sales in this period last year;



* This cautiousness is more clearly perceived in the high-end, more educated, consumer brackets, notably in the largest cities in the South and Southeast regions. To the lower income and less educated consumers, this impact is smaller;



* The continuity of mass wage rise, in a level close to 6% year-on-year, due to the rising income and employment levels, as well as the strong credit offer, helps keeping spending in a high gear. This spending, however, has been moving a little bit away from durable goods, that demand more confidence in the long term, to semidurable goods;



* Overdue payments have been showing a trend of slight growth in the last months, as spending rose fast in the recent past, demanding additional cautiousness on some segments. And affects, more directly, durable and semidurable goods, that rely more on credit for their sales;



* As happened in the last quarter of 2008, when the global economic scenario worsened, importing the foreign crisis brings, in the moment, some level of concern for retailers and industries, although in a lesser scale over what happened in that period. This more mature behavior has the power to stop the domestic economic scenario getting worse, and the government has been taking its share of responsibility, lowering interest rates and pointing to its concern on keeping a healthy level of domestic economic activity;



* North, Northeast and Midwest are the regions less affected by this more cautious spending behavior and tend to keep a growth level closer to the one that prevailed in the first three quarters this year. In 2012 this scenario is expected to continue, and those three regions will tend to keep growing above the country’s average;



* The retail sales growth this year shall be in the 6.5% - 6.8% range, considering the IBGE data already available, if any unexpected thing happens;



* For 2012, retail sales shall continue to be positive, although in a slightly lower level than in 2011. The segment, however, is expected to continue driving GDP growth, that will also grow below this year’s level;



* Brazil will continue to be, in the next years, one of the world’s top five country in domestic spending and retail sales growth, continuing to attract the attention of foreign companies for investiments in new operations or in the purchase of companies, increasing the competitive potential of the market;



* The areas more demanded for retail operations are apparel, DIY, drugstores, food service and e-commerce.



The sum of all these elements leads to the continuity of a positive scenario for the expansion of businesses, with organic growth of already existing formats and operations; development of new formats, specially in emerging markets; implementation of new sales channels, particularly in the digital commerce; and also new brands and concepts to serve segments and niches that already saw their spending potential grow.

It means everything is OK for the next year. And for the other ones as well.

Marcos Gouvêa de Souza (mgsouza@gsmd.com.br), CEO, GS&MD – Gouvêa de Souza
http://www.dataevarejo.com.br/artigos.asp?id=797&from=pg