MEXICO CITY — Brazil’s retailers, which are seeing sales plunge as the country sees coronavirus cases skyrocket, need roughly $4 billion in aid to survive the crisis and help shore up cash-strapped businesses.
“Credit has not been flowing to retailers and while the government has announced some measures, it’s not enough,” said Fernando Pimentel, president of top apparel trade lobby Abit in Sao Paulo. “The Central Bank has announced a $250 billion package for all industries, including guarantees for banks to issue loans and there are tax extensions, etc. But we need more. For our industry, at least $4 billion.”
His comments came as São Paulo’s big malls, such as shopping JK Iguatemi, sprung back to life last week, alongside other retailers and high-street boutiques after the government decided to reopen Latin America’s largest economy, even as the virus continues to spread rapidly. This, however, has fueled criticism that President Jair Bolsonaro is getting ahead of himself to save businesses and could trigger an uncontrollable second wave of the epidemic.
Over the weekend, Brazil reported 41,000 deaths, surpassing the U.K. and now ranking second only to the U.S. with the greatest number of fatalities from the virus.
But Pimentel said it’s crucial for businesses to restart operations — as some unnamed retailers have already filed for bankruptcy — and that they are doing so very carefully to stem possible infections.
“We had a tremendous drop in sales during the quarantine, with 85 percent to 90 percent declines,” said Pimentel, nothing that he has never worked harder in his life. “Our forecast is now for a 60 percent decline for the year, in real terms.”
Pimentel said São Paulo, Rio, Parana and Santa Catarina State (home to trendy Florianópolis) have resumed operations. Between the states of São Paulo and Rio, home to Rio de Janeiro, the area represents 25 percent to 30 percent of Brazil’s garment consumption, according to Pimentel.
The reopening won’t be full throttle, however. “In São Paulo, some stores will only be open for four hours a day with only 25 percent to 35 percent of capacity allowed. In Rio, shopping centers can stay open for six to eight hours. Some cities will operate normally but with restrictions about the number of people allowed to shop at the same time and with social distancing measures such as masks.”
Most Brazilian stores have also banned fitting rooms, according to Pimentel. But they have provided customers more time to exchange goods, including the country’s largest department-store chain Renner, which now allows shoppers to return goods for three months versus one before. Still, the merchandise “will have to go through a hygienization process,” Pimentel noted.
The executive added all stores will need to comply with strict health and safety protocols. On top of wearing masks, shoppers will have to use alcohol to sanitize hands. Store staff, in addition, will need to sanitize merchandise after shoppers touch it.
These regulations will also come to be in Manaus, the capital of Brazil’s Amazon State and the virus’ epicenter with 55,000 infections. Big merchants there, including Renner and Riachuelo, are yet to reopen stores, however, according to Pimentel.
“Sales are improving,” said Camila, the owner of a boutique in Manauara Shopping Center in Manaus, without providing her last name, adding that sales fell 80 percent in the past three months. “We are hoping it will get better.”
Pimentel dismissed criticism that the government mishandled the crisis and could have engaged in stricter lockdowns. He said Brazil is too big for a one-size-fits-all containment strategy and that different regions had to engage in diverse strategies, some with tougher quarantines and others with more relaxed ones.
“What we need now is more concentration and better organization to solve the problem,” said Pimentel, declining to comment on Bolsonaro’s policies.
Fashion p.r. executive Mariana Guimaraes agreed the reopening is necessary to save businesses shuttered for nearly three months.
She said her neighborhood near São Paulo’s Shopping Iguatemi is slowly becoming more crowded but she’s unsure how many Brazilians will actually resume shopping.
“I don’t think people are going to go out that much to shop or buy things. They are still worried about the situation.”