The Garbarino and Ribeiro crises represent the most painful face of the digital challenge for the retail industry. Both chains, two of the leaders, face serious financial difficulties, with large debts, unpaid wages, bounced checks, bankruptcy filings, and negotiate on the edge of the ledge the arrival of new investment partners.
Such turbulences expose great changes, in a context of sales contraction and the rise of new competitors. “There are many more players for a smaller table”, Sums up Bruno Drobetta, Samsung executive.
Due to the recession and devaluations, in the last 5 years the electronics market was cut in half measured in units. In 2017, 13.3 million cell phones were dispatched, which contrasts with the 6.7 million last year. The decline is in contrast to the notable expansion of retail chains in previous years and the notable take-off in online sales driven by the pandemic. “Since 2015 It was already noticed that there were plenty of square meters of retail”, Remarks Rafael Vieyra, Newsan manager.
The Garbarino thing, then, is not accidental. Until 2020, it was the leading chain in the sector, with 200 street stores and 4,325 employees. The group also controlled 46 other Compumundo outlets and faced an estimated debt of $ 12,000 million. In June of last year, it was bought by Carlos Rosales, also owner of the insurer Prof and leader of San Lorenzo, and a year later, Today the chain has 105 branches (many without operating), another 34 of Compumundo and 3,800 employees.
His future is unknown. Because the retail business changed dramatically, with new formulas and lower costs. In the technological field (electronics and household appliances) the market is divided like this: the traditional channel (chains and specialized stores in physical and virtual format) represents between 65 and 70% of sales. Another 20% are handled by large hypermarkets and the remaining 10% by online businesses in all its variants.
This last platoon makes base in digital sales stores (marketplaces) own or others. Traditional players (Garbarino, Frávega and Musimundo), manufacturers (Newsan, Mirgor), brands (Samsung, Motorola, Philips and LG), banks (Nación, Ciudad, Supervielle, ICBC), wholesalers and merchants and above all Mercado Libre compete there. . Marcos Galperin’s company plays everywhere: it manages the platform; buys and sells products and now they also make orders for their own brands: Tedge (technology), Klatter (bikes and tools) and Begonia (decoration).
“The word that defines the market is promiscuity”Says Vieyra, referring to the multiple roles that players adopt. It is not a pejorative term, but for example, Mirgor (which manufactures cell phones and TV for Samsung) also manages the commercial network of the Korean brand (50 points of sale) and his (Diggit), which has a single physical store in the San Miguel town and works completely online.
“We enter the retail business to accompany brands and not to compete”, Clarifies José Alonso, CEO of the Mirgor group. In fact, physical stores are not strictly sales venues but “pick up points”, as the places where merchandise is picked up are called. Regarding the crisis and the reconversion of the large chains, Alonso maintains that today “retail is very healthy”And adds that the concentration of the market in few players is a good thing. “This is how it works in Brazil, Colombia, Chile and in the rest of the world,” said the executive.
From behind and taking advantage of the gaps of Garbarino and RibeiroSome chains in the interior of the country with different expansion models are gaining ground: Grupo Márquez, Cetrogar, Pardo, Naldo Lombardi and Castillo. In Capital and after a long reconversion process, Frávega maintains a privileged position, with 110 branches and 2,800 employees. In its portal “Frávega online”, The firm expanded its catalog and offers everything from electronics (cell phones, TV and washing machines) to mattresses, furniture and baby cribs, among other items.
As in other commercial areas (supermarkets and department stores, of the Falabella type), in the industry they agree that the electronics market was oversized in terms of surface area. A local implies big costs (rents, staff pay, maintenance service), which erodes profitability. The advance of eCommerce, boosted by the pandemic, affects Garbarino, Falabella and Walmart equally, to name a few cases.
However, the liberation of spaces (empty premises) represents an opportunity for some chains. “We identify that positions with good locations are released, which we are analyzing very carefully ”, admits Pablo Cetrolo, commercial director of Cetrogar, a family chain that emerged in the Chaco and that has 90 stores distributed in 14 provinces. Scepter is going strong in the Center and North of the country and plans to land in Capital and GBA, if conditions allow it.
Despite the crisis and recession, the company plans 5 new openings before the end of the year, which does not imply ignoring the difficulties that the sector is going through. “This does not mean that the business is up,” says Cetrolo, “but you have to see how a market rearranges itself.” With its headquarters in Resistencia, Chaco, Cetrogar now has 1,700 employees.
Online commerce attracted new competitors. Last December, Banco Nación installed its “BNA Store”, in which 100,000 products have been dispatched, mostly notebooks, PCs, cell phones, tablets and household appliances. It is a classic marketplace (similar to Mercado Libre) in the who act as intermediaries for around 25 suppliers to open new accounts, cards and loans.
The Banco Ciudad store has more travel. It has been operating for 4 years, they offer 10,000 products (white clothes, electro and bazaar, among others) and they also experienced a jump in operations. “Since April, sales multiplied by 15”, Says Maximiliano Coll, director of the entity. On the other hand, it clarifies that the objective of the marketplace is to improve the customer experience. “Buying a financial product does not produce pleasure: buying a TV, yes,” he said.
Mercado Libre launches its own electronic and bicycle brands
Marcos Galperin ups the ante and launches his own brands to compete with commercial chains.
Large retail chains face a difficult outlook. Between the recession, devaluations and market contraction, traditional companies (Garbarino, Frávega, Cetrogar, among others) have a giant ahead of them to compete. It is about Mercado Libre, which today participates in the sector as an intermediary, buys and sells like chains do and also manufactures for its own brands: Tedge (tech), Klatter (bikes and tools) and Begonia (home decor items).
With the rise in online sales, these new Mercado Libre roles cause concern and even discomfort in many electronics manufacturers and also in specialized retail chains. “Very recently we began to develop a project that allows us to complement the current offer with high quality products and competitive prices,” said the company when asked about it.
In the same way, they also pointed out that “Mercado Libre buys products from recognized brands from both local and foreign brands and we have agreements with the main cell phone, TV, audio, computer and gaming brands ”. In the middle of the pandemic, for example, they agreed to the exclusive sale of some Samsung lines and also Nokia (whose license is in the hands of the Fuegian manufacturer Solnik).
“On the other hand, like other large retail chains and marketplaces, we buy products from suppliers to sell on our platform as Mercado Libre’s own brands. We are venturing into items such as electronics, home products, tools and fitness under the brands Tedge, Begonia, Klatter and Basics ”, they added.
Faced with this, businesses and manufacturers express their disappointment because they consider that “Mercado Libre is the one that manages the search algorithms of the platform“, Where chains and brands also have their own stores installed,” in exchange for a significant percentage of sales, “he told Economic a top executive in the sector.
From Mercado Libre they deflated any conspiracy theory. “This is a small project that is designed as a complement to the offer of our marketplace, and represents only 0.2% of the total value of products sold”, They remarked. In addition, they said that “within the platform, the products compete with the same rules and conditions as any other seller”.
The truth is that Mercado Libre’s own brands are taking off. The product catalog, on the other hand, is quite extensive. Tedge’s shelf, for example, includes computers, televisions, cell phones, small household appliances, headphones, PC keyboards, audio equipment, laptop backpacks and even electric kitchen ovens and mixers, among many other items.
Under the Klatter umbrella, they offer a highly diversified catalog of bicycles (in parallel with the high global demand during the pandemic) and all kinds of tools, from drills to pressure washers. Within Begonia, the brand for home decoration, there are kitchen items (set of suitcases or saucepans), trash cans, picture frames, hangers and night tables.
Mercado Libre ensures that the launch of its own brands is recent. In industry, on the contrary, they trusted the Economic what have been on the market for a year and a half, As minimum. “What happens is that before the pandemic they had a very small participation”, They maintain.
The greater participation of Mercado Libre coincides with a very strong contraction in the general market (close to 50% in some categories, such as cell phones) and the phenomenal growth of eCommerce since the start of the pandemic, as well as the emergence of new competitors for commercial chains and international brands.
Precisely, this context full of difficulties led to the crisis of two of the main players in the sector: Garbarino and Ribeiro accumulate heavy debts, arrears in payments, closings of premises and unpaid wages and are looking for an investment partner, who allow you to avoid bankruptcy.
In fact, a rumor spread in the industry that Mercado Libre at some point showed interest in buying Garbarino, before being bought by Carlos Rosales, its current owner. And that he finally ruled out that possibility due to his financial red.