Welcome to Management in Focus, the monthly newsletter from Galeazzi & Associados. On the last Monday of each month, you receive exclusive analyses, topics to keep an eye on, and viewpoints from Galeazzi & Associados on what drives the market and business, so you can enhance your planning and make better decisions based on insights and perspectives from our professionals.

After an intense month in economic terms and its impacts on businesses, we feel compelled to return to one of the most prevalent topics in Galeazzi's routine: retail operations. There is still a lot of instability in the sector, whether due to the apparent boost of clothing and electronics companies or the devaluation of large corporations, considered traditional, secure, and above criticism for their shareholders. In summary, the million-dollar question remains: when (and how) will retail recover?

Unfortunately, it's still not possible to provide a concrete answer. The retail crisis did not arise suddenly but is the result of a series of factors that have circulated in the industry for years, especially when considering the pace of technological adoption, logistical bottlenecks, and fierce international competition.

We cannot ignore the role of high interest rates in the first half of 2023, even though they signaled some decline in the second quarter. The macroeconomic scenario remains challenging for businesses in this regard. At the same time, companies continue to face the accumulation of debts, imbalanced cash flow, and consumer delinquency— not to mention the anticipation of receivables to reinforce cash flow and sustain operations, which proves to be a risky strategy.

All these circumstances have been fertile ground for financial and organizational restructuring, albeit often painful maneuvers. However, in an attempt to find some light in this very long tunnel, consumers are starting to show some willingness to increase spending. This is indicated by a survey released by the National Confederation of Commerce of Goods, Services, and Tourism (CNC), which shows the highest level of spending intention by Brazilians in the last eight years. Perhaps there is a "scent of optimism" in the air for the coming months.

Until next time!