CNC: Valentine’s Day sales return to pre-pandemic levels

Research by the National Confederation of Trade in Goods, Services and Tourism (CNC), released this Wednesday (7), estimates that the volume of retail trade sales for Valentine’s Day, celebrated on June 12, will reach R$ 2.54 billion, discounting inflation, practically a return to the pre-covid-19 pandemic period.

In 2019, the date recorded a financial movement of BRL 2.53 billion. The projected result for this year, however, shows a reduction of 2.2% compared to the same date in 2022 (BRL 2.60 billion). Valentine’s Day is the sixth most important commemorative date in retail in terms of financial transactions, highlights CNC.

CNC economist Fabio Bentes told the Brazil Agency that the explanation for this lower sales expectation, in comparison with last year, is very concentrated in consumption conditions. The good news, according to Bentes, is that inflation is slowing down, with the Extended Consumer Price Index (IPCA) in 12 months below 4%, which has not happened since October 2020. “This is the good part of the story . What is causing sales to drop this year is the condition of the credit market”.

According to the Central Bank (BC) indicator, the average interest rate on credit operations with free resources reached 59.7% per year, in April 2023, the highest rate in almost six years for Valentine’s Day. “Associated with this evolution of the interest rate well above that observed last year, we also have a very high level of indebtedness”. According to bancl, the average income commitment has been above 30% for a year.

Sectors

Traditionally, in addition to the clothing sector, Valentine’s Day has a good turnout for durable consumer goods, such as electronics in general. Fabio Bentes warned, however, that when credit becomes expensive, as it is today, with compromised income it is very difficult for consumers to repeat last year’s consumption, because there is, basically, a credit issue behind this expectation. This will be reflected in all sectors, except pharmacy, drugstore, perfumery, cosmetics, which should have a slight increase compared to last year. “It’s the only segment of retail that can expect some growth.”

This is explained because retail consumption is currently very concentrated on essential items, which include fuel, which does not affect the commemorative date; supermarkets, which in addition to not having a very strong appeal for Valentine’s Day, prices are very high; and pharmacy, drugstore, perfumery, cosmetics. “Of this trio of essential segments, basically pharmacies and drugstores remained. The others, which depend on credit, should have a significant drop compared to last year”.

Preference

The preference of the Brazilian consumer still lies in the clothing segment, because the average purchase price ends up being lower than that of others, such as electronics. “On most retail dates, with the exception of Easter and Black Friday, clothing tends to be heavily impacted. There you have the souvenir so the date does not go blank”.

The clothing sector is expected to have a drop in this period, compared to last year. Together, the clothing, footwear and accessories segments should move R$ 1.021 billion, corresponding to 41% of the total. Compared to last year, however, this branch of retail tends to show a loss of 6.4%.

São Paulo (R$ 849.5 million), Rio Grande do Sul (R$ 250.89 million) and Minas Gerais (R$ 232 million) will account for more than half (52%) of the national financial transactions on that date.

The basket of goods and services most consumed on Valentine’s Day reveals expansion of 8.7% compared to 2022, against a rise of 3.9% in the IPCA in 12 months. The biggest increases are observed in chocolates (12.2%), men’s clothing (12%), men’s shoes (17.5%), women’s shoes (14.4%), sneakers (10.3%), skin care products (18.2%), perfume (16.4%), make-up article (17.5%, accommodation (14.4%) and book (11.9%). theater and concerts (-1.4%), natural flowers (-2.5% and telephone sets (-3.7%).

average spend

A survey carried out by the Fecomércio Institute of Research and Analysis (IFec RJ) on May 26 and 29, with 820 consumers in the city of Rio de Janeiro, shows that the average expenditure on gifts for Valentine’s Day will be R$ 200, higher to Mother’s Day (R$ 167) and Easter (R$ 107). The financial movement on the date should reach approximately R$ 446 million.

The survey reveals that 50.1% of respondents intend to buy gifts, against 45.7% who are not going to gift anyone. Among those who intend to buy or have already bought a gift, preferences are for clothes (33.3%), followed by perfumes and cosmetics (21.7%); shoes, bags or accessories (17%); and jewelry (8.3%). Of the total number of consumers who are going to gift someone on the date, 65.2% said they intend to buy in physical stores and 27.3% in virtual stores.

Optimism

The retail trade in Rio is optimistic about Valentine’s Day this year and estimates sales growth of 3%. This is what indicates the Sales Expectation survey for Valentine’s Day, carried out between May 22nd and 30th by the Clube de Directores Lojajistas do Rio de Janeiro (CDLRio) and by the Union of Retailers of the Municipality of Rio de Janeiro (SindilojasRio). 300 shopkeepers were interviewed.

The president of both entities, Aldo Gonçalves, pointed out that optimism is moderate among shopkeepers, since sales in the first quarter had a timid increase of 1%. Gonçalves stated that even though it is one of the most important commemorative dates for commerce, the sector remains concerned with the economic scenario in the state of Rio de Janeiro and also with the violence and urban disorder caused by street vendors, which “grow frighteningly in commemorative dates”.

Warm clothes, clothing, footwear (including sneakers), handbags and accessories, jewelry, perfumes, lingerie, smartphonesbeauty products and flowers must be the best selling products.