Brazilian retail is about to achieve its best performance in over ten years. According to IBGE, so far, only June showed an actual decline in results. Additionally, a survey by the National Confederation of Commerce of Goods, Services, and Tourism (CNC) projects a 30% growth in sales for 2024, something not seen since 2013. According to Scanntech projections, the food retail sector alone is expected to generate R$1.27 trillion in revenue this year. These factors are being driven by an increase in payroll mass and job availability for consumers.
“The overall scenario for 2024 has been positive, with commemorative dates like Mother’s Day and Consumer Day boosting retail. We also viewed 2024 favorably from the perspective of credit recovery. There was good capital circulation in the economy, especially due to low unemployment rates. It’s a cascading effect where credit also played a leading role in this growth scenario,” comments Glauco Soares Filho, co-founder of RPE – Retail Payment Ecosystem.
In October of last year, several sectors recorded sales growth. Compared to 2023, total growth so far has been 6.5%. Month-over-month, sales of pharmaceuticals and perfumery grew (16.1%), as did furniture and appliances (9.9%); textiles, clothing, and footwear (7.9%); supermarkets, hypermarkets, and food products (5.6%); and personal and household items (4.7%), among others.
During Christmas, the results were also positive. According to ICVA, sales between December 19 and 25, 2024, increased by 3.4% compared to the same period the previous year, with the best-performing sectors being supermarkets (6% growth); drugstores and pharmacies (5.8%); and optics and jewelry stores (5.7%). According to Visa Consulting & Analytics, since November 1, there has been a 12.2% increase in year-end sales compared to 2023, considering all payment methods, including other financial services beyond those provided by Visa.
Will a Selic rate above 14% harm retail?
Despite the positive scenario, economic volatility has directly impacted retail and consumer purchasing power. With the Selic rate increase, now set at 12.25% annually but projected to reach 14.75% in 2025 according to the Central Bank’s Boletim Focus, a warning has been raised about the rising cost of credit lines and a potential reduction in consumer spending. As debts and interest rates rise alongside the Selic, access to higher-value goods like appliances, electronics, vehicles, and furniture becomes limited, and less money circulates in the market. To some extent, this also affects retailers, who end up with higher levels of debt. “This scenario directly impacts credit availability, making it more expensive and consequently scarcer. Because of this, retailers need to be more assertive to make sales,” points out Glauco Soares Filho.
As an alternative to stimulate consumption, retailers need to invest in their own customer loyalty strategies, such as offering credit and providing store-branded cards, known as Private Label. Although Pix is the population’s favorite payment method, with 29 billion transactions in the first half of 2024 alone, according to the Brazilian Association of Credit Card and Services Companies (ABECS), retail-branded cards are gaining popularity.
According to the survey ‘Fiserv Insights: Brazilians and the Use of Credit Cards Today and Tomorrow,’ 62% of the population already has at least one retail store credit card. And once they have one, 67% of people end up spending more with it. Specifically among individuals in classes D and E, this number reaches 81%. This is because 28% of people in classes D and E consider credit cards as part of their income, and 28% see installment payments as the main benefit of this payment method. Additionally, individuals in classes D and E often have more than one card to increase their available credit limit—meaning they seek greater access to income.
“The main driver of all this is credit, but retailers have also diversified customer acquisition and sought to retain them through appropriate CRM programs, cashback policies, loyalty programs, and other incentives to ensure consumers return and not just make a single purchase but establish recurring spending, especially in the durable goods sector. In the food sector, this also happens, but the format and discount percentages tend to be more conservative,” explains Glauco.
What lies ahead?
For 2025, trends point to an even greater integration of retail with technology. E-commerce, whose revenue grew by 18.7% in the first half of 2024, reaching R$160.3 billion, driven by the food sector (18.4%), will continue to thrive alongside the incorporation of financial services. This way, it will become increasingly possible to link purchases to consumers’ credit needs, such as loans, financing, and other services, tailored to their needs and budgets.
“Brazilian consumption and retail today are pressured by the rising dollar, inflation, and this Selic hike, which was predictable and signaled by COPOM. Even so, retailers anticipated this movement more structurally in 2024, innovating in technology and combined offerings. These factors, along with the positive scenario of lower unemployment and increased payroll mass we’re seeing now, should bring stability to retail this year. After all, retail plays a key role in supporting the Brazilian economy, representing a significant portion of GDP,” comments Lucas Dornellas, Chief Revenue Officer at RPE – Retail Payment Ecosystem. According to data from the Brazilian Society of Retail and Consumption (SBVC), expanded retail reached R$2.75 trillion, representing 25.23% of GDP. Meanwhile, restricted retail stood at R$2.23 trillion, accounting for 20.45% of the country’s GDP.
For Pedro Albuquerque, co-founder and director of new business at RPE, the main challenge for retail in 2025 will be ‘controlling fixed costs, reducing their leverage, and having debts not tied to interest rates. This way, retailers will have more opportunities to launch new products, open new stores, and ensure more structured growth. With an effective share in GDP, Brazilian retail remains an essential engine of the economy. Betting on technological strategies and loyalty programs will be key to facing the challenges of 2025 and maintaining sustainable sector growth,’ concludes the expert.
