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Retail sales fell again in November

They were 1.7% lower than the same month in 2023. Year-end sales would bring relief to retail trade

After having rebounded in October, SME retail sales fell 1.7% year-on-year in November and accumulate a contraction of 12.2% in the first 11 months of the year. In the monthly comparison they grew 3.9%. The exit from the recession is not yet a fact and there are sectors that are still in the red. It is pointed out that this month there will be improvements for the Fiestas.

This is according to the SME Retail Sales Index of the Argentine Confederation of Medium-sized Enterprises (CAME). Last month, businesses reported that they received price increases from some suppliers and that, to compensate, they implemented promotions that managed to maintain stability in various areas.

In November, five of the seven items surveyed registered year-on-year declines in sales. The largest contraction was detected in Perfumery (-15.4%), followed by Pharmacies (-10.4%) and Bazaar, decoration, home textiles (-9.4%). On the other hand, Food and beverages (+4.4%) and Footwear and Leather Goods (+2.6%) rose.

These falls and the difficulty of the economy to take off are reflected in other indicators. For example, according to Indec, the manufacturing industrial production index (manufacturing IPI) for October showed a 2% drop compared to the same month in 2023. The accumulated of 2024 presented a decrease of 11.6% and compared to September, the variation was negative by 0.8 percent.

It should be noted that two activity indicators surveyed by Indec and reported on Friday gave negative values in October.

The Synthetic Indicator of Construction Activity (ISAC) registered a 24.5% year-on-year decline and 29% year-to-date. Compared to the same month in 2023, there were decreases of 51.2% in ceramic sanitary ware; 34.9% in granite and calcareous mosaics; 32.9% in round iron and steels for construction; 27.3% in processed concrete; 27.2% in the rest of the inputs (includes taps, seamless steel pipes and glass for construction); 27.0% in gypsum; 26.3% in hollow bricks; 24.2% in ceramic floors and cladding; 19.9% in Portland cement; 16.6% on asphalt; 12.8% in plasterboard; 9.6% in construction paints; and 4.9% in lime.

The Manufacturing Industrial Production Index (IPIM) surveyed by the official statistical agency also showed a fall of 2% in October and 11.6% for the accumulated of the first ten months, with falls in 11 of the 16 divisions covered, including double-digit negative variations in "Non-metallic mineral products" (-16.8%(; "Basic metal industries" (-11.4), "Rubber and plastic products" (-12) and "Metal products" (-12.3). The manufacturing items that showed positive variations were "Food and beverages" (6.9%); "Petroleum refining, coke and nuclear fuel" (12.4), "Motor vehicles, bodies, trailers and auto parts" (4.7), "Other transport equipment" (9.2) and "Tobacco products" (7%).

By category

As for the different items of SME retail sales for November surveyed by CAME, the outlook is as follows:

Food and beverages

Sales of food and beverages rose 4.4% year-on-year in November and accumulated a 14.5% drop in the first eleven months of the year compared to the same period in 2023. In the month-on-month comparison, they were 0.1% above October.

"The sector was satisfied with the behavior of demand in the penultimate month of the year, although it expressed concern about the increases in meat prices, particularly in the last week of the month. This factor raises concerns about a possible decrease in sales during the end of the year holidays. Likewise, informal sales were pointed out as a relevant issue, since businesses reported an unusual increase in their activity," said CAME.

Bazaar, Decoration, Home Textiles & Furniture

Sales in this area fell 9.4% year-on-year in November and add up to a decline of 14.6% in the first eleven months of 2024. Compared to October, sales grew 3.4%.

The sector's overall expectations improved due to price stability and the boost of promotions, which made it easier to obtain liquidity. The businesses consulted by CAME indicated an increase in the supply of imported products, which has made it possible to offer more competitive prices to the consumer. However, the furniture sector was particularly affected, registering minimum sales levels during the month.

Footwear and leather goods

Footwear sales improved by 2.6% year-on-year, and accumulated a 7.2% drop in 2024. Compared to October, they rose 3.4%.

Businesses increased promotions and reduced prices to boost sales, especially in lower-value products. This generated greater movement in the market. However, border cities did not experience the same impact. In the businesses surveyed, they pointed out that, despite the sales, consumers choose to make their purchases in neighboring countries, where they perceive better opportunities, especially in towns near Chile.

Textiles and clothing

In this area, one of the most affected by both the recession as it is non-essential consumption and the opening of imports, sales fell 0.8% year-on-year in November and accumulate an increase of 1.4% in the first eleven months of the year compared to the same period in 2023. In the month-on-month comparison, they increased 3%.

The promotions and sales on many products were attractive, which generated interest, but when it came to making the purchase, doubt and postponement prevailed. Despite this, the stores surveyed maintain positive expectations for December.

Pharmacy

Pharmacy sales decreased 10.4% year-on-year in November and total a 22.1% drop in the first eleven months of the year compared to the same period in 2023. In the month-on-month measurement, they grew 3.2%.

CAME specified: "The reduction in demand was mainly recorded in non-essential products, such as dietary supplements and hair care products, as well as in expensive and specialized treatments, such as medications for chronic diseases."

Perfumery

Perfumery sales fell 15.4% year-on-year, and until November they registered a decline of 28%, compared to the same period in 2023. In relation to October, there was an increase of 6.8%.

Pharmacy and perfumery are two of the sectors most affected by the fall in purchasing power

"Consumers focused their purchase on essential products, leaving aside items considered luxury, such as perfumes and high-end beauty products. In addition, the growth of e-commerce, with its frequent discounts and promotions, diverted some spending from physical stores to online platforms. Although many perfumeries implemented marketing strategies, such as special promotions or new product launches, the results were limited," CAME said.

Hardware, electrical materials and building materials

Sales declined 2.1% year-on-year in November and the contraction through November reached 13.1%. In the month-on-month comparison, they increased 2.5%.

In the shops measured, they observed a slight cooling in the construction industry, with delays in projects and less investment in infrastructure, which affected the demand for materials. The main delays came from residential projects, which also had a negative impact on hardware stores and electrical materials, which did not perform well in November.

On the other hand, CAME highlighted the obstacles faced by SMEs: in November, 50.6% pointed to the lack of sales, 31.3% placed it to high production and logistics costs, 8.3% referred to obstacles to accessing credit, and 4.3% to collection problems, which in some areas such as Food and Beverages was more important than in others.

The tax burden continued to be the main problem for businesses and, as throughout the year, measures are being demanded to strengthen domestic demand.

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