Supermarket accounts for 80% of the best sellers on Black Friday, says head of Mercado Livre

Of the ten most sold products during Black Friday at Mercado Livre, eight were from supermarkets, a category that grew 540% in volume in this year’s edition of the event, which took place on Friday (26).

Rising inflation has left expensive items on the back burner, and many budget-hungry shoppers have postponed cell phone purchases to fill carts with food, toilet paper and pet food.

The assessment is by Fernando Yunes, who leads the Mercado Livre operation in Brazil. The platform represents about 30% of sales in the digital market.

“Families with pressured purchasing power wanted to change their cell phones and decided to hold back a little longer. They decided to take out promotions on items with recurring expenses, such as toilet paper, food in high volume, kitchen and cleaning products, pet food”, he says Yunes.

In addition to inflation, part of the population switched devices and purchased new electronics and appliances in the first year of the pandemic. With parts supply problems and the devaluation of the real, the technology industry found it difficult to pass on discounts to the final consumer.

“In relation to the historical price, there may be this perception that the event did not have big discounts, but the industry made an effort and so did the retailers”, he said. “When the price goes up 20% and, in the Black Friday promotion, the discount is 20%, the final consumer — who is not worried about costs, raw material and the dollar — thinks it’s the same price from a while ago.”

According to Yunes, the platform gained market share. Ecommerce data point to growth of 5% to 6% in sales of Black Friday this year. With the discount for inflation, however, sales were up to 5% lower compared to 2020.

What is the balance of Black Friday? Growth compared to last year in the total value sold, but with a different combination: the supermarket category grew 540% in volume and 310% in GMV [valor bruto de mercadoria], so it was a very strong growth, positively surprised us. These were products from major partners, such as GPA, Nestlé, Unilever, Ambev, Heineken, Big, among others.

The ticket categories [valor] higher average had a performance that is not compared to supermarkets, which shows a change in the mix of the cart, with an increase in essential products.

How was the sale of electronics? It was still the category that sold the most. Black Friday is very strong in electronics, then comes home and decoration. An interesting fact is that throughout the Free Market, the average ticket of customers grows 1%, but inside this ticket what we notice is more products in the cart, but individually 11% cheaper compared to last year.

So, in general terms, inflation of 10%: products that cost R$100 in 2020, today with promotions, cost R$110. People bought cheaper items to the point where the average value of each product dropped by 11% . At a time of pressure on family budgets, this was the behavior.

How much did the grocery store represent among the best sellers? Of the ten most sold, eight were supermarket items: condensed milk, beverages, beer, chocolate milk, coffee capsules. To give you an idea, from Thursday (25) to Friday (26), we sell more than 4 million products. Everything has already been dispatched and we will deliver Black Friday on Monday (29).

Does this change in the cart come from a longer period of time or is it driven by rising inflation? It’s a combination of two things. Mercado Livre represents 30% of ecommerce, so you can understand a little about what happens in macroeconomics.

The first point is the reduction in the average ticket and the second comes from our effort to develop the supermarket category online. It is the consumer leader in Brazil, but digital penetration was less than 1%, now it is around 2%.

Regarding the scenario, I think that families with pressured purchasing power wanted to change their cell phones and decided to hold back a little longer. They decided to take up promotions on recurring expense items, such as toilet paper, high-volume food, kitchen and cleaning products, pet food, which increased by 370%.

The number of electronic items sold declined, while the personal care and construction materials and tools sector grew by more than double digits.

Were vendors able to give discounts like in other years? They managed to give a discount, but the industry has been passing on the costs. Some registered an increase of 10% to 30% in the value of the product, mainly in the electronics industry, where there is a lack of components and the dollar has a direct impact.

When the price goes up 20% and, in the Black Friday promotion, the discount is 20%, the final consumer, who is not worried about costs, raw material and the dollar, thinks it is the same price as a time ago. This product is 20% cheaper than it will be after Black Friday, but it is difficult for a person to look at the price and say: “let me buy it now because later it will be more expensive”.

Regarding the historical price, there may be this perception that the event did not have big discounts, but the industry made an effort and so did the retailers. We put 20% more investment compared to last year [a empresa trabalha com descontos financiados em parceria com os vendedores], but even so these categories ended up suffering.

The technology sector also sold a lot in the first year of the pandemic. There was also anticipation. The sale was very explosive last year and came strong until the first quarter of this year. Whoever changed the refrigerator does not change. We are at a time when the economy is difficult, it affects people’s confidence level, soon the election will take place. The consumer waits, buys the essentials.

You mentioned 4 million items. Was the logistics prepared for this change, the output of smaller items but on a new scale? On Monday they will be at people’s homes. The investment was made during the year, we anticipate that this demand for supermarkets could arise. We hired 2,000 people just for Black Friday, there are now 12,000 working in logistics. There was all the investment in distribution centers, planes, the event could have been bigger than we were going to attend. We have 1 million families who take half of their income from the Free Market, it is an obligation for the chain to work.

The first ecommerce data came out. Despite the nominal increase, which always happens, inflation has reduced revenue. What I can say is that we gained market share. November was very strong. A 6% growth in ecommerce is low, we grew more than that. This year, the growth is based on 100% open stores, so we have to consider that ecommerce grew with purchases in physical stores. Last year it was completely online, this year we split the cake.

Does the result of this Friday change the expectation for the Christmas sale? Let’s stick to the plan. It is a date with many gifts, clothes, but we will continue to invest heavily in supermarkets. People are going to start using this category a lot.

X-RAY

Fernando Yunes has been the leader of the Mercado Livre operation in Brazil since 2020. Before that, he presided over Sem Parar and worked for ten years at Whirpool, where he was vice president of sales and digital transformation. He holds a degree in business administration and mechanical engineering and an MBA from the University of Michigan, USA.