Inflation has become one of the factors that threaten the recovery of sales in department stores, supermarkets and specialized stores, and this could be compounded by an increase in costs for the sector if Congress gives the green light to the electricity reform.
Vicente Yáñez, who chairs the National Association of Self-Service and Department Stores (ANTAD), of which chains such as Soriana, Liverpool or Sanborns are part, stated that the presidential proposal that plans to eliminate energy self-supply contracts will affect the increase in prices to final buyers.
Created under legislation prior to the 2013 reform, self-supply permits are intended to allow large companies to jointly build power generation plants, under the figure of partners. The companies generally opted for wind power plants that use the transmission network of the Federal Electricity Commission (CFE). The federal administration has complained that these plants indiscriminately increase the number of partners that are supplied by the power plants, without making new investments and taking market away from the state company.
“In our sector there are a lot of [these contracts]. Electricity is one of the three most important costs for our associates and, of course, they make up the price of the products. It impacts much more than rent. What would happen? Well, it would leave fewer resources for investment, and not only in our sector,” he said at a press conference. “We calculate that the cost of electricity is around 2 or 3% of the price of the products, the impact that could occur is enormous.”
The representative of the association that brings together stores such as Palacio de Hierro or Liverpool, announced that they have worked closely with legislators so that they know the impact of the reform on the country’s competitiveness and job creation.
Yáñez added that other factors that will affect the performance of ANTAD associates during this year will be the uncertainty due to the variants of COVID-19, the uncertain outlook for the economy, the growth of informal trade, the volatility in the price of raw materials and logistics problems experienced worldwide
For now, the sales forecast for this year remains in positive territory, with nominal growth in units with more than a year in operation, known as same stores, of 4.3% and 7.1% in total stores, where Consider the stores that opened during the year. Yañez points out that growth will be marginal, if inflation is discounted.
reverse to investment
For this year, the companies associated with ANTAD calculate investments of 1,700 million dollars, resources that will be used for remodeling, the opening of new stores, logistics and distribution, as well as digitization. However, the figure could be cut according to the changes in energy matters and the uncertainty for investors, national and foreign.
The figure for investments in 2022 is 21.4% higher compared to the 1,400 million dollars that were used in 2021, however, these resources were below the 2,000 million that were projected at the beginning of that year. The investment figure for 2021 was the lowest since 2015, when 1,500 million dollars were exercised.
“When we give the investment perspective, it is the data that the associates give us, as well as the real one that they give us at the end of the year. Why were these investments not made? Well, because we are in a very difficult moment, the economy is not as we would like and the chains surely had to reduce the programmed investments and this is the result”, he declared.
The green epidemiological traffic light in most of the country’s entities favored December sales, which reported a 13.7% growth in units with more than a year in operation. Including new openings (total stores), it was 16%, considering the calendar effect, since in December there was one more Friday compared to the same month in 2020.
In the annual comparison, sales to same stores grew 13% and to total stores 15%. Total sales generated in 2021 accumulated 1.3 pesos, a growth of 2% compared to 2020. With this, they were 5% below the figures for 2019, the pre-pandemic year.
The best performance was that of the clothing and footwear category, which registered a growth of 38.4% at same stores and 41.7% at total stores. Groceries and perishables grew 2.6% at same stores and 4.4% at total stores, while general merchandise reported an increase of 13.2% at same stores and 14.8% at total stores.
By format, self-services had a growth of 2.6% to same stores and 4.2% to total stores. Department stores increased their sales by 28.9% to same stores and 30.8% to total stores, and specialized stores, such as shoe stores or pharmacies, presented a growth of 10.3% to same stores and 12.9% to total stores.
