Price hikes pit appliance makers against retailers
Luiz Guanais, of BTG
Divulgação
Home appliance manufacturers are seeking to raise prices by as much as 8% ahead of Black Friday, in November, to rebuild margins squeezed by higher raw-material and freight costs, but retailers are pushing back. With interest rates high and credit tighter, manufacturers’ ability to push through the increases will be tested during one of the year’s biggest shopping events, when manufacturers and retailers will have to balance prices, margins, and sales volumes.
Whirlpool, owner of the Brastemp and Consul brands, announced price increases in Brazil totaling about 5%, effective Aug. 1. During the company’s earnings call on Aug. 4, Ludovic Beaufils, who heads its Latin American operations, said the increase would be phased in gradually during the third quarter and completed in the fourth. The move aims to restore profitability.
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Excluding currency effects, the company’s Latin America sales fell 2% in the second quarter, as lower prices and an unfavorable product mix outweighed higher volumes in a market marked by heavy promotions. Operating profit fell 46% to $26 million, according to its earnings report. Whirlpool did not respond to a request for an interview.
TCL SEMP also confirmed price increases of between 5% and 8% in its air-conditioning business during the quarter. Within the industry, the argument is cost pressure. “Commodity costs have increased, including aluminum, copper, plastics, and resins, while freight costs have also risen because of higher fuel prices. This has put significant pressure on margins and made price increases necessary,” said Álvaro Ruoso, TCL SEMP’s residential air-conditioning product manager.
Retailers, however, see the situation differently. “The current economic environment leaves little room for suppliers to raise list prices, and in the rare cases when higher product costs are unavoidable, retailers have sought not to pass them on to consumers because of the industry’s intense competition,” said Jorge Gonçalves Filho, president of the Retail Development Institute (IDV).
Other manufacturers are taking a more cautious approach. Atlas Eletrodomésticos, which raised prices in the first half of the year, has decided to freeze further increases. “For the final stretch of 2026, we have no price increases planned,” CEO Márcio Veiga said. Philco’s commercial vice president, Maria Cristina da Matta Silva, also rules out broad-based increases. “We do not operate with a policy of across-the-board price increases.” At Midea Carrier, commercial and marketing vice president Mário Sousa said the priority is to “remain competitive and preserve Brazilian consumers’ purchasing power.”
The industry’s challenge is not just the need to raise prices, but consumers’ ability to absorb the increases. According to Eletros, the industry association representing appliance manufacturers, sales of major household appliances rose 16% in volume between January and May, driven by consumers replacing older appliances, and are expected to increase 5% in the fourth quarter from the same period in 2025. The association, however, is urging caution. “High interest rates, expensive credit, and fragile consumer confidence continue to limit household purchasing power, particularly for higher-value purchases made in installments,” executive president Jorge Nascimento said.
Luiz Guanais, a consumer and retail analyst at BTG Pactual, noted that the ability to sustain the increases depends on credit availability. “This is an extremely credit-sensitive category in Brazil. Prices will only hold if there is some response on the credit side. Otherwise, I think this will have a major impact on volumes, and volumes will fall.”
The results from Electrolux illustrate the challenge. In the U.S., the company raised prices by between 5% and 20% in response to tariffs. In Latin America, organic sales rose 4.5% in the second quarter, driven by volume growth in Brazil and Chile, but price and mix declined because of competition, according to the company’s earnings report. The region’s operating margin, excluding nonrecurring items, rose from 6.5% to 7.7%, supported by higher sales and cost cuts.
During an earnings call with analysts, CEO Yannick Fierling said that, with interest rates high, the industry has been paying greater attention to consumer financing and promotions. Electrolux did not respond to a request for an interview.
Retailers are also beginning to adjust their strategies in response to pricing pressure. Analysts do not expect an aggressive price war and see retailers focusing more on protecting margins. “Magazine Luiza has adopted a conservative approach to preserve cash, seeking more profitable sales and prioritizing margins,” said Vinicius Strano, an analyst at UBS BB. Guanais of BTG adds that Casas Bahia, which is undergoing court-supervised restructuring, has no room to absorb manufacturers’ price increases.
During its earnings call, Magazine Luiza CEO Frederico Trajano said the company had passed on higher prices for memory components used in smartphones and computers, even at the cost of losing some e-commerce market share. At its physical stores, sales of major household appliances rose 15% during the period. According to the company’s earnings report, 35% of sales were paid upfront, a share the company attributes to Pix, Brazil’s instant-payment system, and considers critical to reducing the impact of high interest rates.
At Casas Bahia, credit has been the main constraint. Chief financial officer Elcio Ito said lending standards had become tighter, hurting sales at physical stores, while CEO Renato Franklin said the company had resized its operations based on the assumption that 2027 would be worse than 2026. Online, he said, the retailer has begun raising prices and reducing promotions to align sales volumes with inventory levels. Magazine Luiza and Casas Bahia did not respond to requests for comment.
Casas Bahia’s restructuring could also change the competitive landscape. According to Strano, the closure of 298 stores as part of the court-supervised restructuring could lead to a redistribution of market share. “Foot traffic from those stores has to go somewhere. That could provide some relief for retailers that keep their stores open, as well as regional competitors and e-commerce players.”
Faced with cost pressures and limited room to pass on increases, manufacturers are focusing their Black Friday and Christmas strategies on higher-value products offering more technology and energy efficiency.
“Samsung continues to see opportunities in the premium segment, particularly among consumers looking to bring more technology, design, efficiency, and connectivity into their daily lives,” said Thiago Arbulu, senior director of digital appliances.
LG is also betting on domestic refrigerator production. According to the company, its plant in Fazenda Rio Grande, in Paraná state, which opened at the beginning of the second half with an investment of R$1.5 billion and capacity to produce more than 600,000 units a year, cuts delivery times to retailers by as much as 80%.
The strategy of focusing on higher-value products is also being adopted by brands expanding their presence in Brazil. Hisense, which sells TVs, refrigerators, washer-dryer units and air conditioners, says its sales grew by triple digits in the first half compared with the same period in 2025.
For the second half, the company expects average market prices to rise because of pressure from memory and logistics costs, and plans to focus on higher-specification products such as RGB MiniLED TVs and “side-by-side” refrigerators. “We expect average market prices to rise because of these pressures,” said Matheus Benatti, Hisense Brazil’s director of marketing and products.
Haier, which recently entered the Brazilian market, is taking a different approach to the promotional season. The company said it will enter Black Friday with competitive prices but plans to supplement discounts with benefits such as extended warranties and easier installation. Its Brazilian operation is still being consolidated and combines imported and locally manufactured products, while the company prepares a plan to expand local production.
Financial pressure is not limited to consumers. Restocking is also being affected by more expensive credit and greater selectivity among companies. Allianz Trade, a trade credit insurer, forecasts an 8% increase in corporate insolvencies in Brazil in 2026, following a 24% jump in 2025. “We are not expecting a generalized disruption in supply, but rather a more expensive inventory build-up, greater working-capital needs, more selective purchasing, and greater reliance on financially sound suppliers,” said Felipe Tanus, the company’s credit director in Brazil.
The squeeze is already visible in retail. Casas Bahia’s CEO said some credit insurers reduced the company’s credit limits starting in April, hurting the retailer’s purchasing capacity. For the appliance industry, the environment makes Black Friday a test not only of consumer demand but also of retailers’ ability to finance inventories and absorb price increases.
