Editorial

Inflation bites, consumers curb purchases and distributors take immediate action

Skyrocketing inflation, increasing consumer shopping polarization, and a slowdown in the online channel are driving down consumer goods sales volumes AND chains have to re-think new potential revenue streams and invest more in PLs. Especially these, in fact, seem to be the lifeline for consumers that prefer them over the brand industries, at least according to what surveys say. However, whether purchases are made in traditional brand sales points or in more affordable discount stores, the global cost of living crisis seems to help PLs in any scenario (see Iri’s analysis at p. 4). And so in France, as early as last summer, the giant Carrefour announced a 100-day price freeze on 100 of its PL products that cover the daily needs of its consumers. The list of products goes from coffee to frozen foods, from cleaning products to yogurt, up to diapers. An initiative arrived after the French government requests, trying to defend the consumers’ purchasing power. Also E.Leclerc, in early December, had already met these needs, setting a maximum price limit on over 230 of its essential products. Sainsbury's has also stepped up its Price Lock campaign to freeze the prices of 2,000 PL household and grocery items. Rewe expanded its famous discount brand “ja” to over 1,100 items. And Asda introduced a new first price segment called “Just Essentials”, which includes about 300 products. And, given the initial success, it had to put a limit on the number of pieces that can be purchased per person (only 3). At the same time, Albert Hejin only announced to increase the share of PL products, which is now about 50%. In Italy, Conad prolonged the “Bassi e Fissi” (Low and Fixed) initiative until September 30. However, there are also those who use the “shrinkinflation” strategy to mitigate price increasing on raw materials and operating costs. Through this marketing strategy, in fact, companies reduce the quantity of product in the packaging of FMCGs, keeping prices unchanged. This is the case of Tesco, who reduced by 50 grams the weight of the entire range of PL ready-to-eat meals and, previously, also Morrisons had acted similarly. A dangerous path which could threaten the consumers’ strong trust in PL, and thus turning into a boomerang effect on the entire category.

Maria Teresa Manuelli Editorial director