Brazil’s Retail Outlook 2025: How Companies Can Adapt to Slowing Growth
By Luiz Fonseca
The fourth edition of the Consumer and Retail Trend Indicator by FGV reveals a shifting landscape for Brazil’s retail sector. While 2024 showed signs of strong consumer activity, 2025 brings clear evidence of cooling momentum across key economic drivers. From slowing hypermarket growth to weaker household income, businesses in consumer goods, retail, and pharma must rethink strategies to stay competitive.
Below are the main economic facts shaping Brazil’s outlook—and the strategic responses companies can adopt.
Hypermarket & Supermarket Slowdown
Hypermarkets and supermarkets—the largest retail sector in Brazil, accounting for 54% of core retail—are losing momentum. After a 4.6% expansion in 2024, growth is projected to fall sharply to 1.47% in 2025 and nearly flatline at 0.07% in 2026. This slowdown reflects constrained credit, reduced fiscal stimulus, and ongoing pressure on household purchasing power.
Strategic responses:
- CPG companies: Adopt Revenue Growth Management (RGM) to balance pricing and promotions. Instead of blanket price hikes, use precise, data-driven adjustments. Optimize pack sizes, bundle offers, and invest in promotions that win directly at the shelf—the “moment of truth” when consumers decide.
- Retailers: Expand private label offerings. High-quality store brands not only provide better margins but also resonate with increasingly price-sensitive shoppers looking for affordable alternatives.
- Pharma Companies: Seasonal Campaigns. Increase profitability per customer through strategic cross-selling of complementary goods and targeted seasonal promotions designed to enhance shopper engagement and loyalty.
Household Consumption Growth is Cooling
Household consumption, which represents 63.7% of Brazil’s GDP, is showing signs of fatigue. After peaking at 4.8% in Q4 2024, growth is expected to converge to around 3% in 2025, down from the previous 4% forecast. This cooling signals broader weakness in consumer demand, affecting nearly every category.
Strategic response:
- Across all sectors: Companies should adopt a “necessity” positioning. Marketing must shift focus away from aspiration or luxury and emphasize reliability, everyday utility, and affordability. In uncertain times, consumers prioritize what they cannot go without.
Real Income Growth is Slowing
Household income, a key driver of retail spending, is also under pressure. Families’ real monthly income growth dropped from 7.4% in 2024 to 5.9% as of April 2025, with forecasts for the full year lowered to 3.21%.
With purchasing power weakening, companies face a margin squeeze: costs are rising, but consumers have less to spend.
Strategic responses:
- CPG companies: Pursue cost leadership. Reformulate products where possible to lower production costs without sacrificing quality, enabling stable pricing.
- Retailers: Use aggressive promotions on staple items—such as rice, bread, and milk—to establish a reputation as the destination for affordable essentials. While this may reduce short-term margins, it can build long-term customer loyalty.
- Pharma companies: Increase pricing transparency. Clearly communicating the cost of over-the-counter (OTC) products helps maintain trust. Innovative membership models offering pharmacy discounts can also soften the blow for cost-conscious consumers.
Consumer Confidence: Tentative Stabilization
After a steep 14% fall in February 2025, Brazil’s consumer confidence index rebounded modestly by 2.1% in May. It is expected to stabilize around the 90-point mark, which remains 12.5% lower year-on-year by the end of 2025.
While far from optimistic, this stabilization signals that sentiment may be finding a floor.
Strategic response:
- All sectors: Double down on trust-building messaging. Emphasize company heritage, reliability, and quality. For Brazilian firms, leaning on national identity and long-term presence in the market can strengthen consumer connection.
The Role of AI and Image Recognition
In this challenging environment, companies need more than traditional market insights—they need real-time, actionable data. This is where AI-powered image recognition becomes essential.
By automating shelf audits, retailers and CPG companies can reduce the time and money spent on manual checks while gaining accurate insights into:
- Product availability (ensuring shelves are stocked to meet demand)
- Price monitoring (tracking competitor pricing and promotional activity)
- Planogram compliance (making sure shelves follow strategic layouts to maximize margin and sales)
With markets evolving quickly and consumer behaviors shifting week to week, these insights allow businesses to react in real time—adjusting promotions, reallocating inventory, and refining execution strategies.
Ultimately, AI-powered shelf intelligence ensures that companies aren’t just responding to Brazil’s retail slowdown—they are staying one step ahead of it.
Conclusion
Brazil’s retail sector in 2025 faces a cooling economy marked by slower growth in supermarkets, weaker household consumption, declining income, and cautious consumer sentiment. While challenges are clear, opportunities remain for companies that adapt strategically.
For finance, this means pursuing efficiency and precision in pricing. For sales and marketing, it means emphasizing necessity, affordability, and trust. And across the board, it means using AI-driven image recognition to bring agility and accuracy to decision-making.
In a market defined by uncertainty, success will belong to the companies that combine resilience with innovation—meeting consumers where they are today while preparing for the growth opportunities of tomorrow.
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