The rise of in-house retail credit: survival strategy or credit risk?

The 113% surge in in-house credit offerings by Brazilian retailers signals a structural shift as companies attempt to shield revenues amid high capital costs. By internalizing credit, retailers act as banks to mitigate the impact of consumption contraction and limited traditional financing. While effective for short-term loyalty, this strategy places retailers in a precarious position where default risk management is as critical as merchandise sales, blurring the lines between the real and financial sectors. With the Selic rate at 14.00% p.a., the USD at R$ 5.19, and 12-month IPCA at 4.44%, the macroeconomic environment forces retailers to seek internal alternatives to maintain working capital. Clareza Capital notes that this pursuit of financial innovation risks sacrificing asset safety margins. The systemic risk lies in liquidity mismatch: paying suppliers upfront while diluting customer receivables. Over the next 180 days, a market consolidation is expected, favoring players with robust data-driven risk analysis as companies with poor credit management face rising provisions for doubtful accounts (PDD).