Increase in food prices causing consumers to adopt habits from the recession.

Consumer behavior in Brazil is being significantly impacted by the rising prices of food, leading to a resurgence of habits last observed during the 2016 recession. Although not as severe as the previous economic crisis, the changes are noticeable across various retail sectors.

According to data from retail executives and surveys tracking food sales at 45,000 retail locations, consumers are making adjustments in their purchase decisions. To afford more expensive food items, shoppers are cutting back on personal care and cleaning products, turning to lower-cost brands to mitigate the effects of price hikes. Additionally, consumers are increasingly turning to cash-and-carry stores for last-minute purchases, a trend known as “immediate consumption” in the industry. Traditionally catering to bulk buying for households and small businesses, these stores are now seeing an uptick in usage for perishables like fruits and vegetables due to recent price spikes and crop failures.

Despite offering limited availability and lower quality compared to major supermarket chains, cash-and-carry outlets are gaining popularity due to their competitive pricing. Data from Scanntech Brasil shows that in categories like groceries, beverages, and perishables, more consumers are opting to make immediate purchases at wholesale stores compared to the same period in 2024. Cash-and-carry stores have also seen growth in market share for perishables and basic groceries compared to supermarkets.

To cope with the rising prices of food items, consumers are increasingly frequenting cash-and-carry outlets for immediate consumption due in part to an increase in store openings. These stores have become more accessible for smaller-scale shopping, with purchases involving one to five items on the rise. The affordability of cash-and-carry outlets compared to traditional supermarkets has made them a more attractive option for many consumers.

Retail chains are adapting their business models to meet shifting consumer demands. Stores like Atacadão and Assaí now lead the food retail market in Brazil in terms of revenue, surpassing major supermarket groups. Cash-and-carry retailers are modifying their product mix and expanding services like butcher counters and deli areas to cater to changing consumer preferences and remain competitive in the market.

Moreover, there has been a noticeable trade-down trend where consumers are opting for cheaper brands and smaller packaging to reduce spending per store visit. This behavior, common during inflationary periods, was prevalent during the economic downturn in 2015 and 2016 and has resurfaced recently with the increase in food prices.

Overall, the impact of rising food costs on consumer behavior in Brazil is evident through changes in purchasing patterns and shopping habits across different retail formats. As the economy adapts to these shifts, retailers are making strategic changes to stay relevant and meet the evolving needs of consumers in the current market.