Adjustments wave grows in retail

There are signs that there will be new inflationary pressures in various segments of short-term consumption area. After the household appliance industry have hit adjustments at the beginning of the year around 2% and 3%-part of this increase has been passed on to the consumer from January to April-there are negotiations underway today between large retailers with manufacturers of Brown line (TVs, stereos) and with the food industry that manufactures high value-added products such as canned and frozen pasta-.
These adjustments-as well as other increases already negotiated this year between retail and consumer goods industry-occur at a time nothing suitable. In addition to the economic downturn and the shrinking retail demand, the Government has said that accompanies "closely" inflationary raises movements in the market. "In macroeconomic terms, we are living in the worst possible scenario, with low growth and inflation. Those seeking adjustments in this environment, it does this because it sells something that few have, with low competition, because he knows that the store will end up accepting. And want to win on price and not in volume sold, "says Claudio Goldberg, professor and coordinator of FGV-RJ retail.
According to three retail networks consulted by the value in the last few days, companies have requested adjustments and Nestlé BRF in a set of products. In the case of the BRF, was presented to a large network of hypermarkets a table with 15% high in the frozen products of the Sadia brand, found the value. In Nestlé, high reach, on average, 10%. Unilever presented to a midsize supermarket chain adjustment of 5% soap powder-part has already been passed in March-and 10% of the price of its Hellmann's mayonnaise, market leader. "Is coming from all but the most high are more expensive, products with higher added value, usually of the leading companies in the segment in which they ask for the increase," said a manager of a medium-sized supermarket network.
Sought, Nestle reported that the rate increase was not on average 10% level. The BRF and Unilever does not manisfestaram. According to the IPCA, measured by the IBGE, the industrial products, the champions of increases in 2013 were the Hamburger (5.32% between January and March), cakes (4.74%), semipreparada (4.5%) and biscuits (4.39%). In hygiene and beauty, the champion is the product for shaving (5.78% in the first quarter). The retail, the industry reports that has to review tables by high freight costs, raw materials and wages.
Between consumer electronics, the three biggest companies-LG, Samsung and Sony-have already waved this month with high tables of 5% to 6%, it was found the value. The companies have not commented on the matter. A large retail network reports that it is the first formal request for readjustment of 2010-since the companies had been registering deflation on items such as TVs a few years ago. "The arrays have pressed the subsidiaries to improve results in Brazil and the price increase ended up turning a shortest path," said a Director of retailer. "This deflation makes room for them press, alleging the banks increases. Ever had that said company until will reduce production and inventory to be able to increase the price of Electronics ".
The negotiations advance despite rising anything conducive to this. Consultants believe that, because of rising inflation, consumers are reportedly cutting certain categories of products in the shopping list. No loss of strength of domestic demand-February was a weak month for supermarkets and retail chains electronics, and March was a little better, but there are no clear signs of recovery in consumption.
These pressures will increase the cost of goods sold (CMV) of retailers in the first and second quarters of 2013. Consequently, this high should have effect on gross profit and gross margin of companies, at a time of increased competition between the networks. This fierce rivalry-more evident from 2012, with the loss of vigor of the economy-had already brought a discussion around the risk of a fall in the profitability of the stores. The new inflationary pressures now tend to strengthen the discussion of the protection of the profit margin on the networks.
If you do not pass the increases, the store may lose margin, but if pass beyond the account may reduce sales volume, which ends up compromising the results the same way. Latest reports from analysts at Deutsche Bank and Bank of America Merrill Lynch highlighted the high volume of promotions to lure Brazilian retail traffic and the risks of the strategy.