Distribution has entered into a war of offers and promotions to retain customers and anticipate the slowdown in consumption that many operators foresee in the last quarter. With inflation in the shopping basket barely slackening (10.5% in August) and a rate rise that has a full impact on household spending, supermarkets face the final stretch of the year with "uncertainty and a little of pessimism," Bernardo Rodilla, retail director of Kantar Worldpanel, highlighted this Wednesday. To compensate for price increases and not slow down consumption, agents in the sector affirm that "promotion will be intensified," the consultancy explained during today's presentation of the Balance of Distribution in Spain.
Rising food prices have caused consumers to adjust their purchases. Distribution has lost sales volume compared to 2022, with a drop of two points year-on-year in August, the report indicates. If the sector remains positive, it is thanks to the increase in prices, with sales growing by 7.8% in value. It sells less but more expensive.
This entire inflationary context has made consumers pay more attention to promotions. The rate of customers considering purchasing a brand that they usually do not purchase if it is on sale has increased more than four points (up to 59.7%). Thus, baskets that include products with offers have grown by 34.8% in the first eight months of the year, with special weight of products with "special prices."
Kantar predicts that the promotional war between brands will continue in the coming weeks, reaching the Christmas campaign, since it is an increasingly determining factor when deciding where to make the purchase. A recent Aecoc survey points in the same direction. 38.9% of large distribution companies foresee a drop in their sales volumes of 5% in the final phase of the year due to the economic context, 27.8% believe that their sales will stagnate and only a third expect grow.
Control of these selective discounts and their communication will be key for supermarket chains, Rodilla highlighted. The report gives the example of Mercadona. Juan Roig's company started the year in a "hesitant" way, gaining ground on its competitors, especially the German hard discounter Lidl. Roig himself stated in his last presentation of results that Mercadona had raised prices "a stupid thing." The chain reacted immediately and a few days later announced a price reduction on 500 products. This move, explains Kantar, once again boosted the chain's sales.
Following this promotional strategy, Mercadona once again gained share and reached a record of almost 27% in August. For the year as a whole, its market share in value stands at 26.1%, 0.3 points more than last year. Lidl is the chain that is growing the most, 0.6 points, although it is still a long way from the Valencian company -see graph-. Promotions thus serve to attract customers and increase sales, adds the consultant. In fact, Mercadona has recovered share in six of the ten product categories analyzed by Kantar despite only reducing prices in half of them.
Food inflation is also slowing down e-commerce distribution. The pandemic and confinement triggered this channel and now it is going backwards. New consumer habits, with smaller and more frequent shopping baskets to control spending, do not help the online channel. The private label has also benefited from this context, with a share of 43.5% in mass consumption sales excluding fresh products, an all-time high. Now, Kantar sees a slowdown in the future. Part of this growth, he clarifies, is explained by price increases, "which have been greater in distribution brands." As they moderate and become equivalent to those of manufacturers, growth will slow down.
