Brazilian retail is about to achieve its best performance in over ten years. According to the IBGE, so far, only June showed an actual decline in results. Furthermore, a survey by the National Confederation of Trade in Goods, Services and Tourism (CNC) is projecting a 30% growth in sales in 2024, what has not happened since 2013. According to projections from Scanntech, only the food retail should represent R$1,27 trillion in revenue for the year. These factors are being driven by the increase in wage mass and job availability for consumers.
The overall scenario for 2024 was positive, with commemorative dates like Mother's Day and Consumer Day boosting retail. We also see 2024 positively from the perspective of the recovery of credit. There was a good circulation of capital in the economy, especially due to the low unemployment rates. It is a cascading effect in which credit was also a protagonist in this boosting scenario, comment Glauco Soares Filho, co-founder of RPE – Retail Payment Ecosystem
In October of last year, several sectors recorded an increase in sales. In relation to 2023, the total growth was 6,5% so far. In comparison with September, sales of pharmaceutical and perfumery items grew 16,1%), as well as those for furniture and appliances 9,9%); fabrics, clothing and footwear 7,9%); supermarkets, hypermarkets and food products 5,6%) and articles for personal and household use (4,7%), among others.
At Christmas, the results were also positive. According to the ICVA, sales between December 19 and 25, 2024 increased by 3,4% compared to the same period last year, given that the sectors that showed the best performance were supermarkets (growth of 6%); drugstores and pharmacies 5,8%) and optics and jewelry (5,7%). According to Visa Consulting & Analytics, since 1st of November, there was an increase of 12,2% in sales at the end of the year compared to 2023, considering all forms of payment, including other financial services beyond those provided by Visa
Selic rate above 14% will harm retail
Despite the positive scenario, economic volatility has directly influenced retail and consumers' purchasing power. With the increase in the Selic rate, now established at 12,25% per year, but with projections to reach 14,75% in 2025, according to the Central Bank's Focus Bulletin, an alert is raised regarding the increase in the cost of credit lines and a possible reduction in consumption by the population. With the increase in debts and interest rates, that accompany the Selic, access to higher value goods, like appliances, electronics, vehicles, furniture, among others, it is limited and there is less money circulating in the market. At some level, this also affects retailers, that end with a higher level of indebtedness. This scenario directly impacts the granting of credit, that becomes more expensive and, consequently, scarcer. Because of this, the retailer needs to be more assertive to sell, points Glauco Soares Filho
As an alternative to stimulate consumption, retailers need to invest in their own customer loyalty formulas, as a credit concession and provision of a store's own card, the so-called Private Label. Although the pix is the beloved payment method of the population, with 29 billion transactions carried out in just the first half of 2024, according to the Brazilian Association of Credit Card and Service Companies (ABECS), proprietary retail cards are becoming popular
According to the research 'Fiserv Insights: Brazilians and the use of credit cards today and tomorrow', 62% of the population already has, at least, a retail store credit card. And, once in the possession of a, 67% of people end up spending more on it. Specifically among individuals from classes D and E, this number reaches 81%. This is because 28% of people from classes D and E consider credit cards as part of their income and 28% see the main benefit of this payment method as the possibility of installment payments for purchases. Along with that, individuals from classes D and E have more than one card to have more available limit. That is to say, they seek greater access to income
The great driver of it all is credit, but retailers have also diversified customer acquisition and sought to retain them through appropriate CRM programs, cashback policies,loyalty and other incentives, so that consumers return and do not just make a purchase in the store, but create recurrence, especially in the durable consumer goods sector. In the food sector, this also happens, but the format and the discount percentage tend to be more conservative, explain Glaucus
What’s coming up
By 2025, trends indicate an increasing integration of retail with technology. E-commerce, whose revenue grew 18,7% in the first half of 2024, reaching R$160,3 billion, driven by the rise of the food sector 18,4%), will remain imposing, together with the incorporation of financial services. In this way, it will become increasingly possible to associate purchases with consumers' credit needs, like loans, financing and other services, in a personalized way according to their needs and budget.
"Brazilian consumption and retail are currently pressured by the rise of the dollar", for inflation, and for this increase in the SELIC, what is predictable and was signaled by COPOM. Even so, retailers anticipated this movement in a more structured way in 2024, innovating in technology and combined offering. These factors, together with the positive scenario of lower unemployment and an increase in the wage mass that we are seeing now, should bring stability to retail this year. After all, retail is responsible for supporting the Brazilian economy, representing an important part of GDP, comment Lucas Dornellas,Chief Revenue Officer at RPE – Retail Payment Ecosystem.According to data from the Brazilian Society of Retail and Consumption (SBVC), the expanded retail reached the amount of R$2,75 trillion, representing 25,23% of Gross Domestic Product (GDP). The restricted retail stood at R$2,23 trillion and meant 20,45% of the country's GDP.
For Pedro Albuquerque, co-founder and director of new business at RPE, the main challenge of retail in 2025 will be "controlling fixed costs, reduce their leverage and have debts not tied to the interest rate. With that, retailers will have more opportunity to launch new products, open new stores and ensure more structured growth. With an effective participation in GDP, Brazilian retail remains an essential engine of the economy. The bet on technological strategies and loyalty programs will be the key to facing the challenges of 2025 and maintaining the sustainable growth of the sector, finalizes the specialist
