reflection of water crisis, the more expensive electricity bill is an additional challenge for the retail at Christmas this year, according to analysts and businessmen.
In addition to raising consumer inflation, higher electricity rates increase operating costs for shopkeepers, who are betting on the date to heat up sales.
On the eve of Christmas, stores and malls usually work with extended hours, which requires a greater consumption of electricity.
“The pressure of energy brings two impacts. The first is the reduction in the consumer’s purchasing power with more expensive energy and the rise in inflation”, points out economist Fabio Bentes, from CNC (National Confederation of Commerce of Goods, Services and Tourism).
“The second effect is of cost. Energy has a very significant weight for certain segments of commerce”, he amends.
According to Bentes, light represents, on average, 7.6% of retail operating expenses.
In hypermarkets and supermarkets, the brand rises to 10.4%, due to the use of equipment to refrigerate products. This percentage is even higher and is close to 20% in the case of small markets and warehouses, says the economist.
This year, energy has become more expensive due to the water crisis in Brazil.
The scarcity of rain forces the activation of thermal plants, which increases the costs for generating electricity. The reflection is the highest bill for businesses and consumers.
In the calculation of the IPCA (Broad National Consumer Price Index), residential electricity accumulates an increase of 19.13% in the year, up to October, and increased by 30.27% in 12 months.
Light is one of the main factors responsible for the rise of the official inflation index in Brazil. The IPCA reached 10.67% in 12 months, until October, according to the IBGE (Brazilian Institute of Geography and Statistics).
Amidst this scenario, even the assembly of traditional decorations with Christmas lights, in shopping centers or in open spaces, tend to become more expensive this year.
Natal Luz, in the municipality of Gramado, in the Rio Grande do Sul mountains, is beginning to feel the effect of more expensive lighting, according to the organizers of the event, which began in late October and runs until January.
The program consists of a series of Christmas shows, and points of the city are decorated with lights and date decorations.
“Without a doubt, we will have a very significant impact in relation to other years and, especially, in relation to the months in which these energy points are not used”, says architect Tatiana Ferreira, head of the infrastructure and security department at Gramadotur, municipality responsible for Natal Luz.
“We still haven’t been able to establish a comparison, as we haven’t completed a month of the event, but the financial impact can already be seen”, he adds.
The cost pressure doesn’t stop there. Because, according to Tatiana, the event uses energy generators to carry out the shows. These generators consume diesel oil, which also became more expensive this year.
Fuel rose with the recovery of oil in the international market and the advance of the dollar, two factors taken into account by Petrobras’ pricing policy.
“We can’t escape the cost increase”, defines Tatiana.
Even so, she sees a more positive scenario this year. In 2020, the event had shows canceled due to the pandemic.
The malls also prepare decorations and bet on Christmas to heat up business. Despite the pressure on costs, the establishments will not abandon the lights and decorations of the date, reports the institutional director of Alshop (Brazilian Association of Shopping Shop Owners), LuÃs Augusto Ildefonso.
According to him, Christmas decoration is an investment that works to bring more people to shopping centers.
In times of more expensive energy, spending on Christmas lights should be higher, but the main impact is consumption to keep stores open for longer, reports the official.
“Christmas is the best time of year for shopping malls. So, the investment in decoration has an almost guaranteed return.”
“Of course, this can generate an increase in the electricity bill, but it is smaller, much less significant, compared to the cost of energy to receive more people and leave the stores open for longer”, he adds.
Specialized companies started, even before Children’s Day, to send Christmas decorations to shopping centers in all regions of Brazil. Ventures in Latin America and Africa even placed orders.
Cipolatti, a company created in 1981 by Conceição Cipolatti and with a factory in JacareÃ, in the Vale do ParaÃba region, in São Paulo, has 95% of its sales coming from decorations and attractions that it supplies to 80 shopping centers.
The company lost 60% of sales in 2020 as a result of the Covid-19 pandemic, says Rita Cipolatti, the brand’s commercial director. For this year, Rita says that carousels, playgrounds, ferris wheels and roller coasters are receiving some demand, but that they will not return with all, because there is still fear of contamination by Covid-19.
Another attraction that gained strength in malls with the pandemic are robots, controlled by an actor who interacts with children remotely, says the businesswoman. “Since this year it is still necessary to avoid touching, there will be a lot of requests for bears, dogs and squirrels that talk to children,” he says.
With the upturn in the sector, Cipolatti predicts that its workforce, which outside the festive season is 150 people, could go from 1,500 to 1,800 people at the end of 2021. Last year, the company had 1,000 people.
Even so, Rita is cautious about recovery. The level of sales before the pandemic could return in 2022, and the businesswoman sees the political polarization and the economic downturn as challenges.
“People are still not going to the mall to spend money. They go because they want to walk after so long at home, but they are buying the basics,” he says.
The company has also suffered since the beginning of the year with the rise in construction material prices and the cost of importing LED and electronic lamps, impacted by the depreciation of the real against the dollar.
Director of Sindilojas-SP (Sao Paulo’s Retail and Retail Trade Union), Aldo Macri goes along the same lines. He also cites the challenge of higher inflation, which affects consumers and entrepreneurs.
In this scenario, shopkeepers have been trying to reduce operating costs, including energy, says the leader.
“We turn off a light here, another there, there’s this concern.”
Macri projects an increase of 2% to 2.5% in Christmas sales in 2021, compared to 2020, in São Paulo’s trade. In the manager’s view, growth is held back by the difficulties that remain in the economic scenario.
In September, CNC estimated an increase of 3.8% in Christmas sales in the country, in 2021, compared to last year. But inflationary pressure tends to cause a downward revision in the forecast, which should be between 3% and 3.5%, according to Fabio Bentes, economist at the entity.
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