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A somber Black Friday ahead amid widespread industry supply crisis

and . Oct 29, 2020
Black Friday is already the biggest shopping day on the Brazilian calendar, but an industry supply crisis is lowering expectations for 2020 Image: Abscent/Shutterstock

Imported from the U.S. ten years ago, it did not take long for Black Friday to become the biggest shopping day of the Brazilian calendar. Outstripping Christmas, Mother’s Day and Brazil’s Valentines Day equivalent “Sweethearts Day,” sales for Black Friday 2019 rose 23.8 percent in comparison to the previous year, hitting a stunning BRL 3.2 billion (USD 555 million) — that, despite the fact Brazil has no Thanksgiving tradition, to which Black Friday is tied.

But expectations for Black Friday 2020 are desperately low.

Months of economic stoppage during the Covid-19 pandemic have brought many retailers to their knees, almost half of families have less disposable income than they had this time last year, according to consultancy firm GfK.</p> <p>With the continuous devaluation of the Brazilian currency — the greenback opened Thursday trading at BRL 5.77 — the usual suspects for big Black Friday deals, such as smartphones, electronics, and appliances, will provide few discounts, due to being a market largely built on imports.</p> <p>Indeed, the pessimistic forecasts for Black Friday 2020 are tied to a wider industry problem of supply shortages. A <a href="http://www.portaldaindustria.com.br/estatisticas/sondesp-78-mercado-de-insumos-e-materias-primas/">study</a> carried out by the <a href="http://www.portaldaindustria.com.br/cni/en/">National Confederation of Industry (CNI)</a> found that 68 percent of companies surveyed reported difficulties obtaining inputs or raw materials on the domestic market. The rate drops to a still concerning 56 percent for companies using inputs imported from abroad.</p> <p>Moreover, 82 percent of companies reported an increase in prices for raw materials, with 31 percent classifying it as an &#8220;accentuated&#8221; rise.&nbsp;</p> <h2>No stock to meet clients&#8217; Black Friday demand</h2> <p>According to the study, 44 percent of companies are having trouble meeting the demands of clients, due largely to a lack of stock, an increase in demand not matched by production capacity, and an inability to produce more. Of these firms, the vast majority said that a lack of inputs was the biggest stumbling block — and it is an obstacle set to remain for at least another three months.</p> <p>Over half of companies said this input crisis will continue and they will only be able to catch up with customer demand in 2021. Looking at the data divided by sector, the furniture, textiles, and plastic materials industries are feeling the hardest blow.</p> <h2>Small companies disproportionately affected&nbsp;</h2> <p>The scenario is even more severe among small companies, of which 70 percent were affected by the lack of inputs, and 28 percent said they were experiencing &#8220;significant difficulties.&#8221; CNI president Robson Braga de Andrade says that companies opted to reduce their stocks in order to face the severe drop in revenue and access to working capital at the beginning of the pandemic.</p> <p>“The economy reacted even quicker than we expected. Therefore, we had a discrepancy between the supply and demand of inputs. And both producers and suppliers had low stocks. At the peak of the crisis, we saw productive chains demobilized and we had the devaluation of the Brazilian Real, causing an increase in prices for imported inputs,&#8221; he added.

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Euan Marshall

Originally from Scotland, Euan Marshall is a journalist who ditched his kilt and bagpipes for a caipirinha and a football in 2011, when he traded Glasgow for São Paulo. Specializing in Brazilian soccer, politics and the connection between the two, he authored a comprehensive history of Brazilian soccer entitled “A to Zico: An Alphabet of Brazilian Football.”

Renato Alves

Renato Alves is a Brazilian journalist who has worked for Correio Braziliense and Crusoé.

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