Brazilian retail is currently operating under interest rate levels that are often dismissed as just another difficult phase for the economy. This interpretation, however, is insufficient, as what is currently underway is not simply a temporary slowdown, but reveals a more profound shift in the criteria that have sustained the sector's growth over the past decade.
For years, much of the retail sector relied on three relatively predictable factors: expanding supply, intensive use of promotions, and broad access to credit. In segments with higher average ticket prices, such as technology, furniture, and home appliances, this combination was especially relevant, as it allowed for market expansion, anticipating consumption, and sustaining high sales volumes.
In Brazil, credit plays an even more central role than in other economies, which are characterized by compressed incomes and high sensitivity to household budgets, with installment payments being the main enabler of demands that would hardly be met if purchased in cash. When this mechanism expands, consumption accelerates, but when it contracts, a significant portion of the market loses momentum.
Recent figures help illustrate this trend. With the Selic rate at 14.25% per year, the cost of money continues to put pressure on families and businesses. At the same time, data from the Central Bank shows that revolving credit card debt remains above 300% per year, highlighting how a significant portion of financed consumption has become more expensive and less efficient.
In the technology sector, the change is even more evident. IDC estimates indicate that the average price of smartphones sold in Brazil has risen by about 80% in recent years, while the volume sold has slowed.
Consumers continue to demand connectivity and technological upgrades, always seeking an upgrade from their previous device, but they have begun to make more cautious decisions, evaluating usefulness, replacement timeframes, and payment terms more carefully.
From the companies' perspective, more expensive capital puts pressure on margins, increases inventory costs, and makes the difference more visible between operations capable of consistently generating cash and those excessively dependent on accelerated turnover to sustain growth. During periods of abundant liquidity, this distinction could be relativized, but today it has become central.
However, there is a less visible but equally relevant transformation. For a long time, credit was treated as an accessory instrument, used to enable sales to consumers or to meet specific working capital needs. This model was compatible with a more predictable supply chain, longer cycles, and less operational complexity.
Today's retail business operates differently, bringing together multiple channels, fragmented demand, and shorter cycles. These characteristics have led to financial decisions directly impacting business execution. Inventory levels, replenishment speed, product mix, and the ability to capture commercial opportunities increasingly depend on how capital flows between industry, distributors, retailers, and sales channels.
In practice, credit has ceased to occupy a peripheral position and has become integrated into the infrastructure that connects the entire chain. This helps explain why metrics that dominated the sector's debate in recent years have lost some of their strength. Base expansion, GMV gain, and volume growth remain relevant, but how this growth is financed, what margin it produces, and whether it remains sustainable without artificial demand stimuli are even more important.
A potential reduction in interest rates tends to benefit consumption and reactivate credit-sensitive categories, but even so, it would be premature to imagine a simple return to the retail market of the past. Consumers have become more selective, and the market has begun to value efficiency, financial discipline, and execution capacity more intensely than in previous cycles.
Brazilian retail will continue to offer significant opportunities, but under different criteria than those that marked the last cycle. Credit helped build an important part of this market; the next phase, however, tends to reward less those who only grow in volume and more those who transform scale into profitability, cash generation, and lasting value.
* Silvio Stagni is the CEO of Allied Tecnologia, where he has worked for almost 10 years. The executive has worked for renowned companies such as Motorola, Sony Ericsson, and Samsung, where he was Vice President of Consumer Electronics. Before joining Allied, Stagni served as President of Lenovo for two and a half years.
