September, 2023

In the Stores Market Research PLMA News Events

Governments intervene to fight high grocery prices

In an attempt to decrease inflation, the Hungarian government has introduced new economic regulation changes. As of 1 August, grocery retailers are obliged to offer one product in each of 20 product categories at a discount of at least 15% for a week.

The measure replaces an earlier rule that forced a discount of 10 percent as of 1 June. Retailers also have to make sure that there are sufficient stocks of the discounted products. In order to be able to check prices, large retailers have to publish their current prices in multiple product categories on the Cartel Office’s website. Consumers can report violations of the rule and there are high fines of up to € 100.000.

At the same time as the introduction of the mandatory 15% discount regulation, the government ended the its food price cap policy. The price caps applied to a wide variety of products such as granulated sugar, wheat flour, sunflower oil, pork, chicken meat, milk, chicken’s eggs and table potatoes.

The Romanian government has introduced a decree that caps the profit margin for fruit, vegetables and a dozen other basic fresh produce items. Retailers and cash and carry operators are not allowed to add more than 20% to the purchase price.

Meanwhile in France, Economy Minister Bruno le Maire has reached an agreement with food retailers manufacturers to cut prices on 5,000 products including pasta, poultry, grains and oil. Competition and fraud prevention agency DGCCRF will regularly check supermarket prices and there could be sanctions against companies that do not comply with the rules.

Following the agreement in France, the Belgian Economy Minister Pierre-Yves Dermagne has asked food manufacturers to lower prices. Since prices for energy and some raw materials have been falling on the world market, he expects to see a lowering of prices in supermarkets. The food industry is against a mandatory price reduction and has urged the government to apply different measures such as lowering wage costs and not increasing VAT on food.

EU Commission revises rules on retail alliances

The new “Horizontal Guidelines”, EU rules on joint retail purchasing, have come into force on 1 July. They provide the legal framework for retail and wholesale alliances in Europe. The revised rules show that the Commission assesses international retail alliances as generally permissible and positive in terms of consumer welfare.

Christel Delberghe, Director General of EuroCommerce – the association representing European retailers and wholesalers, commented: “The revised horizontal guidelines affirm the many benefits that joint buying brings to consumers and industry, including better prices, choice, efficiencies and innovation. They also usefully confirm that retail and wholesale alliances may be set up in various ways and engage in different activities – from joint sourcing to joint negotiations of terms and conditions – to help retailers and wholesalers negotiate and bring better prices to households.”

The guidelines also recognise that a key element when assessing the effects of alliances is the countervailing selling power of suppliers – including whether they offer “must-have” products that retailers and wholesalers need to place on their shelves if they want to attract consumers.

The new rules offer helpful guidance on what can and cannot be done when negotiating with suppliers –reiterating the value of hard bargaining for consumers. They also confirm the many positive effects such negotiations can have on consumers, who benefit from better prices and more choice, and for suppliers, who can expand their distribution networks and innovate more.

In the light of the new guidelines, it comes to no surprise that the Commission has ended its investigations into the Agecore and Coopernic retail alliances. The authority sees no signs of an antitrust violation by the international purchasing cooperations.

With the decision, the Brussels competition authority is clarifying a legal issue that has long been controversial between retail companies and big manufacturers. National and European brand associations have always criticized the so-called "on-top" conditions of the European retail alliances as an unjustified demand that is not matched by any concrete commercial reward. The retail side, on the other hand, sees the alliances as an important tool to negotiate more effectively with suppliers on an equal footing in order to offer consumers lower prices and more choice.

In the Stores

Tesco is the first retailer to cover the cost of VAT, 20%, on its range of period pants. The permanent reduction in price is across all eight lines of Tesco’s own-brand F&F period pants.

Online supermarket Picnic is expanding its range to include drugstore products. Hundreds of items are added every week. The Picnic drugstore should be up and running by the end of the year.

Spar Croatia is promoting healthier consumer habits through the ongoing reduction of excessive sugar levels in its own brand ranges. 160 products have already undergone successful recipe alterations, resulting in sugar reductions of up to 80%.

Delhaize is lowering the price of several hundred items under the own brand 'P'tits Lions', bringing the number of discounted products to 1,000.

Netto Marken-Discount customers have a new feature in the app which is a first for food retailers. If a customer doesn't have a coin to unlock the chain on a shopping trolley, they can do using the app.

Deliveroo has introduced an app feature that allows customers to top up takeaway orders with grocery items. Its grocery partners, including Co-op, Sainsbury’s, Waitrose and Morrisons, will be leveraged to offer the groceries.

Asda launches a new scratch-cooking ingredient range to help more people to cook from scratch. The Cook by Asda range includes over 40 brand-new products spanning more than 10 cuisines.

Kaufland presents a new pet food brand called K-Carinura, the products for the different animal species are colour-coded. A total of 60 products are to be offered in the coming months. Further product lines are planned for 2024.

Alcampo introduces Zero Waste products under its own brand Cosmia. Products include washable make-up remover pads and a sponge made from the Konjac plant.

Carrefour is showing the volume of CO2 generated by online orders, a first for a food retailer. Once a customer validates his online order, he sees the total number of kilograms of greenhouse gases generated. The aim is to make consumers aware of the environmental impact of their shopping.

Continente brings a new range of breakfast products and snacks for children to market. The new range is part of the Continente Equilíbrio private-label brand. It consists of breakfast cereals, yoghurts, fruit juices and enriched milk.

Aldi Süd starts a customer loyalty program with a new tester club. In return, the retailer offers consumers prizes and cashbacks. It gives Aldi a chance to collect feedback as well as strengthen relationships with customers.

Penny Italy has revealed its own brand for aeroponic vegetables. The products under the "Pianetiamo" label are produced with a special form of vertical farming, originally developed for space travel.

Migros uses a virtual escape room to lure customers to its stores. In order to unlock new items in the online game, users need to spend money in the store. Who manages to escape has a chance to win great prizes.

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PLMA e-Scanner – September 2023