Bloomberg Línea — The start of interest rate cuts has left the household appliance industry confident that sales of durable goods would pick up again, while a reduction in costs, coupled with innovations in product launches, has also contributed to an improvement in the outlook for the segment’s turnover in 2024.
In an interview with Bloomberg Línea, Gustavo Ambar, VP for Latin America and general manager of the Brazilian operation of global household appliance giant Whirlpool, which owns the Brastemp and Consul brands, said that sales volumes could close the year with double-digit growth as demand recovers.
One of the main levers is precisely Black Friday, when the company was hoping for a surge in sales of new products in the country such as stoves with air friers and front-loading washing machines.
With an eye on changing consumer preferences, Whirlpool is also betting on black appliances, a trend in the segment. The double wash (two baskets for separating white and colored clothes in simultaneous washes) is another example of a product in growing demand, according to Ambar, due to the savings in energy, water and time the appliances offer.
Appliances for smaller apartments
“We’ve been looking for washer-dryer solutions for smaller houses and apartments of 30 and 40 square meters, which is a growing market,” he said.
“Five months ago, I was more skeptical about the improvement in the market, but I’ve revised the outlook and I can even see double-digit growth. The fall in interest rates is a positive sign. The granting of credit brings a certain optimism. We had a restocking of inventories in the third quarter, which points to a positive trend for the fourth,” he said.
Ambar, who assumed the role for Brazil in the second quarter of this year, acknowledged the financial difficulties faced by some of the largest retail chains in the country, but said that there has been a joint effort by the industry and retailers with banks and insurance companies to avoid major credit effects.
This year, major players in the home appliance retail sector, such as Casas Bahia (BHIA3) and Magazine Luiza (MGLU3), have seen their shares fall 76% and 20% year-on-year on the B3 index, compared to a 14% gain on the Ibovespa, the benchmark stock index.
“Retailers have lower stock levels. Price negotiations are never easy, but they were no more difficult than in previous quarters,” said Ambar.
He added that he expected the segment’s sales on Black Friday to be better than in the last two years, when consumers were more indebted due to the higher cost of credit with the Selic (interest) rate, which peaked at 13.75% per year in August 2022.
On November 1, the Brazilian central bank’s monetary policy committee made its third consecutive interest rate cut, to 12.25% per year, signaling further reductions of the same magnitude (0.50 percentage points) after pointing to a trend of disinflation.
“In the third quarter we saw gradual growth in the home appliances category, with a high volume growth of close to 10% year-on-year. Market research shows that consumers are more likely to be interested in buying household appliances than in previous years. We are confident of a good Black Friday,” he said.
At the start of the second half of the year, Eletros, Brazil’s national association of manufacturers of electrical and electronic products, which monitors the industry’s sales for retailers, projected annual sales growth of between 4% and 6% compared to 2022.
The organization compiles data from four segments: air conditioning, white goods (stoves, washing machines and fridges), brown goods (televisions) and portable goods (from blenders to air fryers).
In the first half of the year, according to Eletros, 44 million units were sold, up 13% on the 39 million units sold in the same period of last year.
Chinese competition
Whirlpool, which passed on the rise in production costs to prices in 2021 and early 2022, found it difficult to maintain its market share, but that phase has now been overcome, Ambar says.
“In this third quarter, we gained almost four points of market share in refrigerators, washing machines and stoves. We’re on the right track,” he says.
Commenting on the competition with Asian companies, such as Chinese manufacturers Midea, Hisense, Gree and TCL, he said that this contributed to increasing the market and exposing the differentials of the company’s brands.
In the third quarter, Whirlpool began repositioning the Brastemp brand, Ambar said, and who pointed to the need for interaction with all age groups and a new visual identity for the brand.
“One of our operational priorities is to recover market share,” he said.
Betting on innovation is another of the company’s urgent priorities. He said that 4% of turnover is invested in innovation research, and that Whirlpool develops collaborations with universities.
New products produced in plants outside Brazil are imported for distribution in the country. The Brazilian operation brings in, for example, products from the multinational’s factory in Argentina, such as front-loading washing machines, a model that Asian competitors are also betting on.