Latin America. After a pandemic year and another dragging restrictions, this Black Friday and the future Christmas campaign was eagerly awaited, both by consumers and sellers, but the supply crisis has lowered expectations.
"The increase in the savings possibilities of families due to the confinement and the desire to spend after so much restriction are good data for this campaign," said Neus Soler, collaborating professor of economics and business studies at the Open University of Catalonia (UOC), an expert in consumption and marketing. In this sense, "the motivation of families to buy and consume, the savings collected during the pandemic period and the foreseeable increase in the average price of products due to the supply crisis make us estimate that the average expenditure will be 20% higher than in the previous campaign," Soler explained.
For Soler, the purchase intention will not be affected, but the experience will be affected. "The consumer will advance their Christmas purchases to this period in the face of the supply crisis so as not to run out of stock, instead of waiting for the Christmas campaign, because waiting does not guarantee that they will finally get the product," explained the expert.
Fewer products, fewer discounts
"We are used to seeing a multitude of products with very attractive sales, but we must bear in mind that they will be an atypical Christmas and we will not have the same variety of products or discounts to which we are accustomed; in fact, prices can go up," said Cristian Castillo, professor of Economics and Business Studies at the UOC, an expert in logistics. According to Google, 25% of Latin Americans start searching for the products of their interest between 2 and 3 months before the discount season, however, these promotions are a key factor in their purchase and condition their final decision to the quality and quantity of offers they receive.
"We are in an unprecedented situation of global shortages and we have been dragging it for a year," Castillo warned. According to the expert, this situation has occurred mainly for three main reasons: the first, the bottleneck of post-pandemic production: "The effect of COVID-19 meant a halt for industry and its production, and now that the economy has been revived, factories are not able to reactivate their manufacturing to the same degree as demand does, and that's why there is no stock," he explained.
On the other hand, the shortage of containers: "During COVID-19, many of the containers that arrived were not returned at the time, so, at this time, when we try to reactivate shipments, we find that there are no empty containers for that demand or that they are in ports located in Europe or America where those shipments are not made", Castillo, also a researcher at the UOC's Sustainability and Management (SUMA) group, said. Today, the price of these containers has increased tenfold, from $2,000 to $20,000.
And three, the geopolitical strategy of the Chinese giant: "China has hoarded raw materials, such as plastics, wood or semiconductors, to ensure its own supply, and this is causing other countries to have problems so that this raw material reaches them," explains the expert.
A more expensive Black Friday
Adding all this, it is expected that this Black Friday will become more expensive according to the product and that there will be fewer discounts than in previous times. "Coming out of the COVID-19 crisis, companies assumed the expenses to reactivate consumption, but after a year, and with distribution prices skyrocketing, it is clear that they cannot assume that cost. If, in addition, we add the increase in the price of electricity or fuels, this ends up having an impact on the final product and consumers, since the price of the products rises, "says Castillo. The end is not very encouraging either, at least in the short term: "Until the end of 2022, especially depending on how the pandemic evolves, we will not be able to get out of this serious crisis," warns the expert.
The digital showcase continues to triumph
Something that does not seem to change either in this Black Friday or in the Christmas campaign is the online channel as a preference. "The permanence of the fear of contagion, that face-to-face sales still do not offer the shopping experience that it could offer before the pandemic and that online stores apply convincing sales strategies (for example, free shipping) will make this campaign focus on the online channel," Soler explained.
"Technological products are still at the top of the companies' sales ranking. Being products generally of high amount, it is attractive to buy them on Black Friday, taking advantage of the discount, "said Soler. "Precisely the shortage of semiconductors will make the production prices of technological products higher. Normally, technology companies would take advantage of the launch of new models to reduce the outdated ones and get rid of the accumulated stock. However, the difficulties in producing can delay launches and keep old models with moderate discounts," explained Eduard Àlvarez, also a professor at the UOC's Economics and Business Studies and a member of the Sustainability and Management (SUMA) research group.
According to Webloyalty's Black Friday 2021 report, there will be an increase in purchases of 139% compared to the previous week. However, for Àlvarez, a rationalization in consumption would not be so negative either: "That there is less consumption or more responsible consumption, in the sense of acquiring only those products that are really needed, I do not think it is a bad dynamic, at least for some time, to stop that consumerist behavior so unsustainable."
Analysis carried out by the Open University of Catalonia, UOC.
