Trade faces sales with fewer discounts after ‘catastrophic’ December – CVBJ

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Trade is starting the year less well than expected, after a close in 2021 when sales were weighed down by the impact of the micron variant, and with timid expectations for January. East when the sales period officially begins, and precisely at the time when price increases, hitherto contained in certain cases, should become widespread so as not to increase Christmas consumption.

This discount period, which begins on Friday, will therefore be lower. As Carlos Moreno Figueroa of the Spanish Confederation of Commerce (CEC) illustrates, sales will be lower. For companies that have not done well, especially in more seasonal sectors, such as fashion, s will do its best to eliminate unsold items, with discounts. But the rest will have to adjust the cost increase and transfer it to the product to cushion this constant drop in margin, he regrets.

In his opinion, in January, there will be a general price increase, since many manufacturers have already had an impact on the increase in the cost of raw materials (aluminum, steel, plastic, glass, electronics, etc.) and most distributors will in turn have to pass on this increase in costs.

The sales It is the way in which companies have to get rid of what they did not sell, but by reducing their margin. For companies that have lowered sales and experienced increased costs, this is an almost certain loss.

A “catastrophic” year

The sales officially start after the Three Kings Day, Although in 2012 stores were allowed to choose when to make their offers, there are many that arrive before December and are almost tied to Black Friday, the other most popular discount period among consumers.

Last year the campaign coincided with Filomena, which hampered sales. Textiles, the sector most affected by the pandemic, ended the period with declines of 53%. Given this collapse, now surpassing the numbers from last year’s sales campaign is easy, but that doesn’t mean they will be good, says Eduardo Zamcola, president of Acotex, the employers’ association in the textile sector. .

In the fall, sector activity started to pick up and register increases, but the impact of the micron in the home stretch of 2021 was strong and the last two weeks of December, which we thought were good, were catastrophic. Sales have plummeted and the sales campaign is now based on the micron, although that won’t save the year, says Zamcola, who insists people aren’t buying but costs continue to rise.

In 2020 the sector closed with a 40% decrease in invoicing compared to 2019 and 2021, it will do so with a decrease of 15% compared to last year’s figures. Euromonitor anticipates an increase of 5% for this 2022.

At a general level, including the rest of the sectors, the CEC had calculated to close 2021 15% below what was billed before the crisis, but now it is increasing the figure to 25%.

Prices

Zamcola recalls that with the fall of the influx of people in the stores for fear of being infected, it is added that the dinners and events have been canceled and faced with the sales there are many companies that are having difficulties. to raise the blind because there were a lot of workers downstairs, infected.

Even if the most deterrent effect on the portfolio will be inflation, which closed 2021 at almost 7%, the highest level in 29 years. The economic hangover this situation will have in households and in spending is yet to be seen, says Moreno-Figueroa.

The sector is in a very critical situation, because to the drop in income, we must add the increase in costs by increasing the minimum wage, more taxes, logistics costs and raw materials, Zamcola recalls. .

Moreno-Figueroa highlights the increase of around 15% in the case of electrical appliances, since all the mentioned increases are joined by the warranty law, which adds additional cost pressure for manufacturers.

Spain is lagging behind the EU in terms of the resumption of commercial sales. While in France or Germany they are already 5% above 2019 levels, in Spain they are still 4% lower, according to Euromonitor data.

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