Coronavirus forces Brazilian retailers to close stores and boost e-commerce

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By Gabriela Mello

SAO PAULO (Reuters) – Brazilian retailers are feeling the coronavirus heat as malls close and people stay at home, but e-commerce may benefit.

Brazil’s association of e-commerce, ABComm, said on Thursday that it is likely to review its 2020 outlook soon, with some websites already seeing a surge in sales since March 12 of up to 180%, mainly in food and pharmaceutical items.

Before the coronavirus outbreak, ABComm expected Brazilian e-commerce sales to grow 18% in 2020 from 2019 to 106 billion reais ($20.8 billion).

With the number of confirmed cases rising to 621 from 193 on Wednesday, Brazilians are increasingly restricting consumption to essential items found mostly in pharmacies and supermarkets, so-called “defensive” sectors.

Shares in the local subsidiary of French supermarket group Carrefour SA (PA:) have risen over 12% so far this week, outperforming rival GPA SA (SA:), whose stock has fallen 1.6%.

Still, both are trading significantly better than other retailers selling durable goods such as Via Varejo SA (SA:) and Magazine Luiza SA (SA:). Their shares have slumped over 47% and 27%, respectively.

“Home appliances, electronics are purchases that can be postponed, unlike food and medicine that you need at all times,” said Daniela Bretthauer, co-head of equities at Eleven Financial Research.

She also noted that many home appliance and electronics retailers have their stores inside malls, which are now closing to comply with authorities’ recommendations to avoid large gatherings of people.

A survey conducted by FX Retail Analytics showed an almost 50% drop in visitor traffic in Brazilian malls on Thursday compared with the same period a year ago. Since March 14, visitor traffic fell by 26% year-on-year.

Considering brick-and-mortar stores outside malls, FX Retail Analytics estimates a 22% fall in visitor traffic between March 14 and March 18.

While some retailers are forced to suspend activities, others are taking the initiative and switching their focus to e-commerce operations.

One of them is Lojas Renner, Brazil’s largest fast-fashion retailer, which earlier on Thursday announced the closure of all stores in Brazil, Argentina and Uruguay indefinitely as of March 20.

Its e-commerce business will continue to work with fewer employees.

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