Retail Slowdown: Expect Minimal 0% Growth This Holiday Season, Citing Ibevar & FIA Business School Data

The upcoming holiday season for the retail sector is projected to be a period of minimal, almost flat, growth. Both the restricted and expanded retail segments are expected to see sales figures hover around zero percent, signaling a cautious consumer landscape.

This outlook is based on projections for November, December, and January, indicating a significant slowdown compared to previous periods. The data, compiled by the Brazilian Institute of Executives of Retail and Consumer Market (Ibevar) and FIA Business School, points to a challenging end to the year for many businesses.

The findings highlight the impact of economic factors such as employment, family consumption patterns, elevated interest rates, and ongoing consumer debt. These elements are contributing to a more reserved spending environment, according to expert analysis. The insights were recently disclosed by Ibevar and FIA Business School.

Restricted Retail Faces Stagnation

The restricted retail sector, which includes essential goods like supermarkets, clothing, pharmaceuticals, and home furnishings, is forecasted to experience a slight decline. Projections show a -0.01% change in November compared to the previous month, followed by a -0.04% dip in December. January is expected to be flat, with 0% growth.

This segment typically reflects the day-to-day spending habits of consumers. Despite the slight negative outlook for the immediate future, the restricted retail sector has shown resilience over longer periods. Year-over-year, it saw a 0.58% growth, with a 1.80% increase over the last 12 months, suggesting stability in essential consumption.

Expanded Retail Shows Mixed Signals

In contrast, the expanded retail category, which encompasses all restricted retail segments plus vehicles, motorcycles, parts, and construction materials, presents a different picture. For November, a positive growth of 0.42% is anticipated. However, December is expected to see a -0.02% contraction, while January is projected to rebound with 0.61% growth.

The performance of the expanded retail sector over different timeframes offers a broader view of consumer confidence and investment. This category, including big-ticket items like vehicles and home renovation supplies, has shown a negative trend recently. It experienced a -2.39% decline compared to the same month in 2024 and a -0.08% drop in the 12-month cumulative period.

Economic Headwinds Dampen Consumer Spending

Claudio Felisoni, president of Ibevar, described the upcoming three months as a period of “pífio growth,” or negligible expansion, indicating a sideways movement in the retail market. He attributed this to a combination of factors, including the job market, family spending power, high interest rates, and significant consumer debt levels.

Data from the National Confederation of Commerce of Goods, Services and Tourism (CNC) supports this view. In October, 79.5% of families reported having debts, with 30.5% being delinquent. Alarmingly, 13.2% of individuals stated they would be unable to pay their debts, suggesting a persistent issue with outstanding obligations.

Consumer Behavior Reflects Economic Pressures

Despite the challenging economic climate, consumers are striving to maintain their living standards. This is evident in the continued spending on non-discretionary services and necessities, such as health plans, transportation, and personal care services like beauty salons and gyms, which continue to show growth.

The overall retail performance, as analyzed by Ibevar, indicates that while basic needs spending remains stable, sectors involving larger purchases are facing significant headwinds. The slow recovery in sectors like vehicles and construction materials underscores the cautious approach consumers are taking with their finances during this period of economic uncertainty.