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Where should Brazilian investors look ahead of Black Friday?

. Nov 26, 2020
black friday A strong digital Black Friday should consolidate e-commerce in Brazil. Photo: Exebiche/Shutterstock

The biggest shopping frenzy of the year is just a day away. After a 2020 of slim pickings, companies and investors are eagerly looking forward to Black Friday, as it is set to cement the trends that will drive commerce for the immediate future.   

According to the National Commerce Confederation (CNC), this is set to be Brazil’s biggest Black Friday on record, with a predicted BRL 3.74 billion (USD 700 million) in revenue, six percent higher than 2019. If this is indeed the case, November 27 will be the first red-letter day of the year to see sales enjoying real growth, above inflation.

</p> <p>While most social isolation restrictions have now been lifted in Brazil, e-commerce is still expected to be the driving force behind a successful Black Friday. The CNC expects online sales to grow by 61.4 percent, vastly outstripping the 1.1 percent increase forecasted for brick and mortar stores.&nbsp;</p> <p>Being led by online shopping, Brazil&#8217;s most digital Black Friday on record could strengthen other trends for the future. In a recent <a href="https://conteudos.xpi.com.br/acoes/relatorios/vamos-as-compras-o-que-esperar-da-black-friday-de-2020/?cid=undefined">report</a>, analysts from XP highlighted how major retailers are investing in “Social Commerce,” the trend of bringing influencers and consumers together on live broadcast events, which is already proving to be hugely popular in Asia.&nbsp;</p> <p>Among the biggest retailers, B2W — which manages the Americanas.com website — is expected to hold a massive online event this evening, inviting influencers such as fashion blogger Camila Coutinho and YouTuber Felipe Neto.&nbsp;&nbsp;</p> <p>As fears of a potential second coronavirus wave increase in Brazil, omnichannel strategies will gain increasing importance, including the option to shop on WhatsApp Messenger. And free shipping — never traditionally a major concern among consumers — is now a top-selling point, as 57 percent of consumers polled on Twitter placed this as their second priority for online sales, only behind low prices.  </p> <p>In this sense, analysts see Via Varejo — the owner of retailers Casas Bahia and Ponto Frio — as being a step ahead of the competition, by offering more comprehensive shipping offers. In this case, the comparison is made with <a href="https://brazilian.report/podcast/2019/09/18/amazon-prime-disruption-retail-brazil/">Amazon Inc</a>, which only offers free shipping to its Prime members. </p> <p>Via Varejo is also ahead with regards to another problem facing retailers, which we highlighted <a href="https://brazilian.report/business/2020/10/29/industry-supply-crisis-a-bad-omen-for-brazil-black-friday/">on October 29</a>: a lack of products in stock. According to XP analysts, Via Varejo continued buying stock from its suppliers during the pandemic and is now well prepared to face the shopping frenzy. </p> <h2>What about 2021? </h2> <p>According to analysts from BTG Pactual, a strong digital Black Friday should consolidate e-commerce as “a bullish structural call,” even in a scenario that is not overwhelmingly favorable for commerce as a whole. This evaluation is down to a higher comparison base for growth and the fact that the government&#8217;s emergency aid program is due to end in 2021. </p> <p>These monthly benefits propped up the consumption of lower-income families, meaning that now the focus will be on wealthier clients, who held back on consumption during 2020. </p> <p>In this scenario, it will be increasingly important to gain market share. Analysts estimate that some 135,000 stores closed for good during the pandemic, representing 10 percent of the total number of stores in Brazil. “We see retail much more as a consolidation call (or of more market share gains) involving well-managed/capitalized companies,” they wrote.&nbsp;</p> <p>In this sense, analysts recommend investors should focus on companies with e-commerce growth, strong expansion plans, and &#8220;premium execution,&#8221; quoting MercadoLibre, Magazine Luiza, Arezzo, and Lojas Quero Quero as their favorites.

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Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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