Shortage of inputs disrupts consumer goods market

The imbalance between supply and demand, already felt by the industry and retail throughout 2020, remains this year, with an additional factor: the resumption of consumer spending abroad. The advance of vaccination and economic recovery in some countries, such as China and the United States, raises the risk of new bottlenecks in the production chain in the country.

Global shortage of components for appliances and electronics, including microprocessors and LCD screens, is expected to last until at least the first quarter of 2022. The forecast goes beyond what was expected by manufacturers in Brazil. They were counting on the normalization of the supply chain already in the fourth quarter.

Segments such as electronics, appliances and fashion face periods of instability in production because of the pandemic, with "peaks and valleys" that impact retail sales planning.

"The shortage of goods today is not worse just because sales have fallen," says Felipe Mendes, director of consulting firm GfK Brazil. Mr. Mendes recalls that higher consumer spending in other countries speeds up the search for raw materials like electronic components, textile threads and packaging, which forces factories and retailers to adjust their orders.

"The deceleration of demand in Brazil at this moment helps to counterbalance the pressure on the chain, preventing a greater mismatch," Mr. Mendes says.

The fear is that in the second half - assuming that mass vaccination will speed up - there will be an increase in demand, leading to a new shortage of goods. "The risk is that after June or July, with a higher demand, and in a more generalized way, the lack of supplies will become more critical," an executive of a cell phone maker says.

"The good news is that a possible upturn in the service sector in the second half may shift consumer spending to this segment, which would relieve the pressure on the durable goods chain," the source adds.

According to Dvair Lacerda, commercial head of Goiás-based Fujioka, owner of electronics chain Fujioka, the durable industry is afraid of raising too much the stock of raw materials, such as chips and screens, and then see a lower-than-expected demand.

"The level of uncertainty is high because of a surge in prices. They rose 30% to 40% this year, because inputs are more expensive as their prices are set in dollars, and it is unknown whether the consumer will absorb this increase. Because of this, the manufacturer is also more conservative in...

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