Electronic of auction: brake to the prices by the crisis

The electronics is top, literally. Due to the sharp drop in sales, manufacturers, brands and retailers avoid transferring the devaluation of the peso and financial costs to prices, and aim to liquidate inventories. A survey of AFARTE indicates that the average price of a television set rose 24.7%, well below inflation (48%) and the rise of the dollar (101.4%). In the market, they estimate that more than 1 million units produced for the 2018 World Cup were left unsold due to the crisis, the rise in rates and the loss of purchasing power of salaries.

All electronic categories fell last year (refrigerators, washing machines, kitchens, cell phones, airplanes and computers), but retailers and manufacturers warn that most products, measured in dollars, are the cheapest in the region. “The current price of an appliance reflects a dollar value today at $ 28,” said Alejandro Toscano, a Whirlpool executive. “The shopping tour to Chile was cut, you can not see it anymore,” completes AFARTE president Federico Hellemeyer, alluding to Argentines who, with the $ 20 dollar, crossed the mountain range to destroy electronics and clothing.

The devaluation and the rise in rates changed the panorama. Of all, the most affected categories are TV and computers. According to IDC, sales of PCs and laptops dropped almost 50% last year (some 920,000 units). And that despite the rise of 37% in the first quarter, says Lenovo CEO Juan Martín. “From then on, the drop deepened with the devaluations and the rise in rates,” he added. Likewise, the top executive of the Chinese brand admits that the price of an average team went up 70%. “But in dollars it went down 20%”, he clarified.

The exchange rate has a particular impact on information technology and mobile telephony. “PCs are all imported and cell phones (which mostly come from Tierra del Fuego) are assembled from kits, in a process with very little added value,” explained a source with a long history in the industry. Hence the high impact of the devaluation on the price. Without going any further, they were the two categories that increased the most during 2018.

However, in the sector they argue that the lack of financing harms more than the price increase. “The brands do not publish the price of the product but the value of the quota”, exemplifies Bruno Drobeta, director of the Mobile area of ​​Samsung. On the other hand, the sale of cell phones decreased less than the rest of the categories. “The impact was less because it is not the first products that relegates the consumer,” added Drobeta. What did fall hard is the average ticket.

A warm World Cup

The abrupt jumps of the dollar, the rates and the inflation (loss of the purchasing power) left bad stop to all the chain of value. The case of TVs is illustrative. For the World Cup, 3.5 million TVs were manufactured, slightly above the annual average. Due to the excess of stock, the AFARTE (the chamber of the fueguinas terminals) calculates to produce 2.2 million units this year. “The market got very hot with the World Cup and sales plummeted from June,” Hellemeyer stressed.

Faced with this recessive context, manufacturers, brands and commercial chains face the difficulty of transferring devaluation prices to products based on imported inputs. “The entire industry today works at a loss,” laments Enrique Laffue, CEO of LG. On prices, the executive gave as an example a 32-inch TV: “At the beginning of 2018 it cost US $ 382, ​​on average, and today, that same model is worth US $ 196,” he compared.

Along these lines, AFARTE prepared a comparative report on TV prices and brands, which reveals the following. A smart 40 “from Samsung costs in Argentina US $ 364; in Chile, US $ 408 and in Brazil, US $ 498. A smart Philips of 43 “is worth US $ 349 and in Brazil, US $ 581. In this regard, Laffue went further: “We have a model of high-end LG refrigerator that is cheaper in Argentina than Amazon, it is somewhat ridiculous,” he said.

Executives and manufacturers agree that the normalization of the market could begin in April, when inventories are cleaned up. “The price recovery will depend on the evolution of each category, but the accommodation will be very slow. Today the chains have a lot of stock of products “, interprets Luis Galli, CEO of the Fuengian group Newsan.