2024-11-03 14:15:00
Las sales small and medium enterprise retailers (SMEs) grew by 2.9% annually in October. This rebound occurred at constant prices and showed notable year-on-year momentum, although the sector continues to record a decline of 13.2% in the first ten months of the year. The seasonally adjusted monthly data also showed growth of 7.4%, a relief for a sector that had faced a sustained decline in recent months.
According to the report of the Argentine Confederation of Medium Enterprises (CAME) carried out among more than 1,300 businesses throughout the country, on Mother’s Day, promotions and the possibility of accessing interest-free installments were the main factors that favored the increase in sales. However, the report reveals that 51% of business owners still consider that the lack of sales is the most important obstacle to the growth of their businesses, evidencing a fragile consumption scenario.
The sectoral analysis of sales showed that four of the seven items surveyed by CAME experienced increases compared to October 2023. The footwear and leather goods category stood out with an interannual growth of 10.3%, followed by food and beverages with a increase of 5.8%, and textiles and clothing, with an advance of 4.8%. On the contrary, the perfumery sector fell 15%, and bazaar, decoration and home textiles registered a drop of 7.4%.
Almost 10,000 kiosks have already closed in 2024 due to lack of sales
Despite the growth in October, the context for businesses remains challenging. So far this year, around 10,000 kiosks have already closed throughout the country, mainly affected by the increase in rates and a drop in consumption that affects the profitability of the sector. This phenomenon reflects the difficulties faced by many SMEs, especially those with less margin to absorb rising costs and declining demand.
For other sectors, such as electrical materials, hardware and construction, the impact of interest-free installments and price stability helped boost sales, registering an increase of 2.8% year-on-year. However, so far this year, this item still shows a drop of 14.1%. Entrepreneurs in this sector are optimistic about price stability and financing options, although demand has not yet reached pre-crisis levels.
SME entrepreneurs continue to ask the national government for a tax cut
On the other hand, SMEs in general pointed out the tax burden and high production costs as critical challenges for the sustainability of their businesses. In the CAME survey, 53.5% of respondents indicated that they expect a tax reduction as a key measure for the recovery of the sector, while 15.1% referred to the need to reduce municipal taxes.
With a final quarter that promises discount initiatives such as CyberMonday, where discounts of up to 50% and 18 interest-free installments will be offered, merchants hope that these strategies will maintain the positive momentum to close 2024 with more encouraging figures.
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**Interview with María López, Economic Analyst at the Argentine Confederation of Medium Enterprises (CAME)**
**Date:** November 3, 2024
**Location:** Buenos Aires, Argentina
**Editor:** Thank you for joining us today, María. Recent data has shown a slight recovery in sales for small and medium enterprises, with a 2.9% growth in October. What do you attribute this rebound to?
**María López:** Thank you for having me. The 2.9% growth we saw in sales during October can be largely attributed to specific events like Mother’s Day promotions and the increased availability of interest-free installment plans. These factors encouraged consumers to spend, despite the overall challenging economic landscape.
**Editor:** It’s encouraging to see some growth, but you also mentioned that over 10,000 kiosks have closed this year due to declining sales. Can you elaborate on the challenges faced by SMEs in Argentina?
**María López:** Absolutely. While we are witnessing a momentary uplift, many SMEs are still grappling with significant challenges. The closures reflect a broader economic environment characterized by rising operational costs, including increased rates and lower consumer spending, which severely impact profitability. This situation is particularly tough for smaller businesses that lack the financial cushion to withstand such pressures.
**Editor:** The CAME report highlighted that 51% of business owners consider low sales to be their greatest obstacle. What do you believe needs to be done to improve the consumption scenario in Argentina?
**María López:** Improving the consumption scenario requires a multifaceted approach. Key actions include implementing tax cuts for SMEs to alleviate some financial burdens, enhancing access to credit facilities, and promoting initiatives that boost consumer confidence. Government support is crucial in creating an environment where businesses can thrive again.
**Editor:** You mentioned that while some sectors like electrical materials and construction have seen increases in sales due to financing options, there is still a significant decline year-to-date. How optimistic are you about the recovery in those sectors moving forward?
**María López:** There is cautious optimism in sectors that are experiencing some growth, like electrical materials and construction. The interest-free installment options are particularly beneficial, but we need to see sustained demand and stability in prices to ensure recovery. It’s imperative that we integrate price stability and improved market conditions to return to pre-crisis levels.
**Editor:** Thank you, María, for your insights on the current state of SMEs in Argentina and the challenges ahead.
**María López:** Thank you for having me. It’s important for us to keep the dialogue open as we work toward fostering economic growth and resilience in our sector.
