Black Friday 2019: Sales should grow 4% in value
Research by GfK reveals that installment purchases will be essential to boost sales. Excessive promotions can lead retailers to margin loss.
Consolidated since 2016 as the largest retail date for white goods, laptops, consumer electronics, telephony, and computing besides Christmas, this year’s Black Friday is unlikely to have the same performance as 2018, when sales grew nearly 8.5% in November and revenue reached BRL 13 billion. Expectation is BRL 13.5 billion in durable goods, which represents a 4% increase in sales, in value, over the 2018 edition, as a study by research firm GfK reveals.
The lower growth estimate is related to the current level of consumer confidence, which fell from September and November last year, when it was high. There is a slight improvement. “2018 was a very powerful year,” says Felipe Mendes, GfK’s CEO for Brazil and Latin America.
To leverage sales, given that consumer purchasing power is limited, one option is the payment in installments of purchased goods, says Felipe. “The option of offering launch and premium items in installments that fits the consumer’s budget is a stated expectation and can be used as a more profitable action and alternative to promotions.”
Between physical and digital
The consumer has already chosen Black Friday as the event to buy a good or exchange its products for a premium category. “It is a planned but desired purchase. It gets innovations by taking advantage of the promotional prices. The vast majority understood the opportunity,” says the director of GfK. In 2018, at that time, premium cellphone sales grew 20% versus the year average. The same happened with televisions and notebooks, both with an 8% growth.
More aggressive promotions occur at physical retailers and manufacturers. In online, they are more moderate, but in greater numbers. The study finds that Brazilian retailers have been promoting premium items and launches far beyond necessary, impacting margins without recovering the base price after the Black Friday burn. This makes better profitability difficult to achieve. In 2018, margin was lost on some premium items.
The online channel, where Black Friday started off strong, lost to the physical store for the first time in 2018 due to the positive performance of national (+12%) and regional (+8%) retailers. Specialized networks drove growth in the physical channel, which accounted for 72% of November 2018 sales. “If the buying journey is increasingly phygital (physical and digital/online channel) and the online channel has stabilized growth, what we must do is rethink how to integrate channels, improving the experience and perception of customer satisfaction,” says Felipe.
