Prices continue to rise even marginally at Super Market according to data from the research firm Circana, while private label products – mainly food – in the big chains are seeing a new increase in shares as many consumers choose them because they are cheaper due to the ongoing accuracy and fixed wages.
In particular, as Circana data shows, supermarkets started 2024 with an increase in turnover. Total sales in value in the first month of the year amounted to 825 million euros compared to 807 million euros in January 2023. The increase in turnover by 1.8% was not solely inflationary as there was also a 1.1% increase in unit sales volume, which means a 0.7% increase in prices.
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At the same time, private label products rose 3.6% to reach a 27% share of the total market, with growth coming from food.
In terms of promotional activity, the percentage of sales made under offer increased overall in fast-moving products to 25.4% from 22% last January. An increase in offers was recorded in food (25%), in detergents-cleaners (25.8%), in personal care and beauty items (29.1%).
Price reductions in dairy products
Circana data also shows that there were price reductions in dairy (-4.4%), personal care products (-5%), other household products (-4.1%) and alcoholic beverages (-0, 2%). On the other hand, price reductions were recorded in snacks (5.1%), cooking materials (3.5%), non-alcoholic beverages, such as juices, soft drinks (3.4%), frozen foods (1.8%) and in packaged foods (1.1%).
At the same time, the measures of the Ministry of Development have been implemented since March 1st to deal with the accuracy which seems to lead to an adjustment of the commercial policy of the companies.
Describing the new situation that has begun to take shape in the market after two special years with high inflation and the energy crisis, Panagiotis Boretos, vice-president and managing director of Circana, speaking to APE-MPE, points out: “from the messages we have received so far, we estimate that the this year will be special as a set of factors affects its course, while the measures of the Ministry of Development have been implemented in order to limit the intensity of accuracy”.
As Mr. Boretos explains, the upward trend of the supermarket market and in fixed barcode products with a 1.8% increase in sales value and in weighted products or “bulk” with a 3.3% increase in sales value continues , with consumers increasingly choosing private label and smaller packaging products to fill their baskets. At the same time, they increasingly choose small stores up to 400 m2 for their purchases, a fact that the chains are quick to take advantage of by adjusting their investment plan.
With reference to prices, he notes that they are on the rise but at a decreasing rate, i.e. the average price per unit rose in January to +0.7% while in 2023 it closed at +6.6%. “We see that in general price increases follow a downward trend. This is positive but due to many different reasons. Private label products are strengthened with a share of 27% while there is greater promotional pressure in certain categories due to the measures taken. In fact, in the entire market, the promotional pressure reaches 25.4% from 22% last year. Also, consumers are turning to smaller packages. For example, until a year and a half ago, it was rare to see packages of olive oil under one or two liters being bought. Today, however, half the shelf in olive oil includes smaller packages of one liter. All this argues for what we say is a declining price per package. It is increasing, but it does not have the same growth rates as a year ago”.
Moderate optimism about the course of the sector
Regarding the course of the market throughout the year, Mr. Boretos notes that it is very difficult to draw a safe conclusion. “We expect a change in the commercial policy of companies, mainly in terms of offers. We also estimate that overall supermarket sales by value will increase by 3.2% in 2024 compared to 2023 with prices per unit increasing by 1.7%” he emphasizes and adds: “Price is becoming increasingly important discussion point. There is a constant struggle of both suppliers and retailers to make their products and their stores as attractive as possible to consumers so that the latter do not hesitate and worry less at the point of purchase.
Along the same lines, the Consumer Goods Retail Research Institute (IELKA) recorded the opinions of business executives in the sector on the main sectoral issues and challenges of this year. The survey was conducted in the period from 15 to 31 January 2024 using a structured questionnaire and a sample of 130 senior and top business executives (retail-supermarket chains and FMCG suppliers) from the general management and the departments of marketing, sales, purchases, finance, IT, etc. .
According to the results, industry executives expect an increase in sales value in the first half of 2024 (+1.6%) compared to the corresponding half of 2023 and a decrease in sales volume in the first half of 2024 (-1.3 %) compared to the corresponding half of 2023. They also expect the economic climate to remain at positive levels, but also a milder impact of revaluations on business operations and a reduced assessment of long-term negative effects.
Industry expectations
In relation to industry sales expectations, a large percentage of respondents (62%) believe that the value of industry sales will increase in the next half-year (versus 80% in the previous measurement), with a small percentage of 15% who believe that will show a decrease. On average, the executives who participated in the survey estimate that an increase of 1.6% will be recorded in sales in the half of January 2024-June 2024 compared to the same half of 2023. In contrast, the executives estimate a decrease in sales volume in the first half of 2023 (-1.4%) compared to the equivalent of 2023, which is even marginally stronger than the previous measurement (-1.1%). This difference is attributed to inflationary trends that negatively affect consumption habits, with consumers adjusting their spending to the corresponding price level.
Regarding the country’s economic situation, 35% of respondents believe that the last six months improved and the majority (38%) that it got worse. It is noted that this measurement is the third best compared to the measurement recorded since January 2017 when the present study was carried out and the best of the last three years.
The economic climate presents a more improved picture, which is driven by the combination of executives’ estimates (sales, prices, economic conditions). The index stands at 0.33, a slight drop from the previous measurement and relatively high levels recorded for this study. The de-escalation is due to the estimate of lower sales growth and the estimate to limit mark-ups.
Among the issues examined, is the assessment of the current financial situation of the companies, but also the effect of the revaluations. The majority of businesses at a rate of 58% expect a better financial result in terms of their profitability in 2024, while 17% expect a worse financial result. The rest of the companies in the sample either do not yet have a clear picture, or do not expect a change. Virtually most businesses in the retail and food industry (7 in 10 businesses) expect some small profitability in 2024, while less than 1 in 10 expect a loss.
Regarding the factors that will increase prices in 2024, according to industry executives, they are: transport costs (85%), international raw material prices (75%), energy costs (60%), labor costs ( 59%), state regulations (55%) and cost of money (53%).
With information from APE-MPE
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