© Anelia Nikolova
Selling at a loss on a set of products for a long period will necessitate raising the prices of others. In addition, selling a product for a long period at a promotional price is against the anti-dumping provisions of the Competition Protection Act.
Svetlin Adrianov, “Ernst & Young”: A cartel can also be reached with the participation of the state
This is how the executive director of “Billa Bulgaria” Vigintas Shapokas commented on the draft law prepared by the cabinet, which introduces a ceiling on commercial markups for basic goods.
He added that such restrictions are also in violation of the principles of competition, because they will lead to maintaining the same prices for certain products from all chains.
It was reminiscent of Hungary’s bad experience with the imposition of price caps, which eventually saw them rise in price by 40% after they were lifted.
“We cannot afford to maintain an 8% markup. If we limit the markup, we will start losing money, which we cannot afford,” he pointed out. He reminded his previous statement that from every 1 lev the chain earns 2 cents. With the introduction of a ceiling on the markup, this profit will not be able to be maintained, which means that costs must be cut, among which is the reduction of personnel. The company currently employs 4,500 people, making it one of the largest employers.
“We keep part of the inflation”
The director of the chain pointed out that in general they talk about the final prices in the retail chains, and no one discusses the prices at which they buy. “I spoke with the Minister of the Economy and I agreed with his finding that the prices of electricity and gas are falling, as well as of raw materials, and therefore I do not understand why products continue to rise in price,” commented Shapokas. He indicated that, in his opinion, this question should be addressed to the manufacturers.
He also announced that the website created by the government, which announces comparative prices of basic products in Bulgaria and in other countries, does not fulfill a useful role. He gave an example of the fact that the regular prices of the products are indicated there, and every week in the chains there are hundreds on sale. “People are not interested in how much oil costs, but where it is sold at the lowest price today,” he illustrated.
According to the company’s data for 2022, when it was the strongest manifestation of inflation, 45% of the consumer’s basket was with goods on sale. The company’s observations of consumer behavior indicate that when customers find a product at a good price, they buy more than one to stock up for a while.
The company presented a table to illustrate how it “smooths out” some of the inflation in end-user prices.
Consumer finances are improving
From the company’s regular survey of consumer sentiment in the countries where it is represented, conducted in January, it shows that Bulgarian consumers have not generally fallen into dire straits despite high inflation, unlike those in other countries. In the research, the respondents indicate that their financial situation is even improving. At the same time, they continue to bet on the consumption of products mainly in promotion.
Those who answered that they are struggling to make ends meet closely follow the prices of dairy products, eggs, fresh meat and delicatessen.
Bulgarians are extremely patriotic towards local products.
The research also shows that consumers in Bulgaria cannot imagine a meal without meat, and also that they like to buy local products. If they had to give up something, they would choose the sweet stuff.
We will have to wait for the deposit system
In Bulgaria, there is still no system for buying back plastic, metal and glass packaging, because there is no consensus on this. All countries, with few exceptions, have had such a system for a long time. This was commented by Vigintas Shapokas, executive director of “Billa in Bulgaria” to journalists in response to a question about whether the company plans to introduce such a system.
Not long ago, it appeared in some stores of the Lidl and Kaufland chains, where cans and plastic bottles are bought, albeit for modest sums. Read more about this here.
He commented that the interests of the individual participants in such a decision on the introduction of a deposit system are too diverse – manufacturers, chains, traders, the government. He announced that the company will think about the matter when the working group created by the Ministry of the Environment comes up with a decision on what exact system will be adopted in Bulgaria. He added that it is difficult to make long-term plans with these frequent changes in politics in the country.
New stores on the horizon
This year, the chain plans to invest BGN 53 million in new sites, with which it will set foot in 5 cities. A total of 14 sites will be renovated and 12 will be opened. Among them is one in Silistra, which used to exist, but was closed some time ago. They will employ 250 people.
The new sites will be in Sozopol, Troyan, Chirpan and on a busy road near Graf Ignatievo. The chain enters them for the first time.
In 2022, the company reports a 17.4% growth in turnover with the same number of sites and 9.8% more customers. The latter is attributed to the fact that small stores cannot take such measures as large ones to limit part of the price increase.
Since 10 days, the company has also introduced online shopping, and the service is yet to be more widely advertised. For now, it is in Sofia in cooperation with the provider Glovo, and it is not known when it will be implemented in other cities.
2023-04-26 10:23:20
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