Inflation shakes up retail shelves

He is on his favorite playground. Ever since inflation made a comeback on the shelves, Michel-Édouard Leclerc, the superhero of low prices, hasn’t been shy about his pleasure. “Whether at the time of the health crisis, and now with the energy crisis, we have shown that we are the most reactive to the drop in purchasing power and the underlying changes in society”he congratulated himself again this Thursday, December 1 on the occasion of the publication of the BVA barometer on the consumption of French families at the time of inflation.

Block inflation at the door of the stores

It must be said that, as often, the boss of the brand that bears his name was among the first to feel the wind turning. Last May, even though the rise in prices was mainly energy and barely touched the cart, Leclerc drew his “anti-inflation shield” out of the 120 most consumed products in stores. Today, food inflation has reached 12.2% on average, and almost all distributors have set up their own system, with the aim of blocking inflation at the doors of stores.

Price blocking operations, multiplication of promotions and aggressive discounts, ramping up of loyalty programs… in all the marketing departments of the major brands, the teams are hard at work to limit the surge in prices, and attract customers looking for bargains.

“While before we were talking about another way of consuming, more local and more responsible, we have refocused our discourse on the question of price”observes Thierry Desouches, the director of communication at System U. Even Monoprix, perceived for its high prices, has set up its “Monopetitsprix” operation on 300 everyday products.

As for Carrefour, the group launched its “anti-inflation challenge” just before the summer, and has since continued to develop its offers by blocking in turn products from major brands, or distributor brands (MDD). “On the Internet, we have even created an anti-inflation button allowing all products to be replaced by their cheaper equivalent in first price brands or private labels. “, relates for example Stefen Bompais, director of customer relations at Carrefour.

For the moment, things are going quite well: despite the fall in food consumption (-7.5% over one year in October, according to INSEE), sales in supermarkets are holding up. “Large-scale distribution is benefiting from a postponement of catering and certain distribution channels having a less good price image”explains Emily Mayer, retail expert at IRI, an institute specializing in consumption.

The revenge of cupboards on fridges

With many more arbitrations than before, the physiognomy of the truck has however greatly evolved over the past year. While entry-level brands have been in freefall in recent years, they are once again popular with consumers (+ 7% market share in 2022). “We are currently witnessing a phenomenon of generalized downscaling, that is to say that consumers of big brands are switching to private labelsand those who consumed private labels refer to the first prices »observes Emily Mayer.

The growth crisis of organic, and fresh products in general, with in particular a very marked decline in sales of red meat and fish, are moreover the most concrete illustration of this. “While in recent years, the agri-food industries have invested heavily in fresh produce, the current period is much more favorable to groceries, which are less expensive but also less perishable”, specifies the agri-food consultant Philippe Goetzmann. The revenge of cupboards on fridges, but also basics on ultra-differentiated products…

Juggling between brands

“Overall, consumers are turning away from the most marketed products, such as the four slices of nitrite-free ham at €5.99”, observes for his part Thierry Desouches. Proof of the great sagacity of customers, the most inflationary products are those which have fallen the most in volume (– 5% according to a recent Nielsen-Dauvers survey), while the least inflationary products are those which have progressed the most ( + 4%).

Beyond this arbitration between products, consumers have also become accustomed to juggling more between the different brands and distribution channels. “They are very proactive in this complicated period, by bringing into play competition between brands, but also by implementing advanced fundraising and storage strategies, and by having more and more recourse to anti-waste applications”explains Dominique Levy, Deputy General Manager at BVA.

A trend no doubt exacerbated by the increase in price differences between brands: according to the IRI, the price corridor – that is to say the difference in price on the same cart of products, between the two most expensive and the two cheapest brands – would have increased sharply to reach 26% more in the most expensive cart, compared to 15% a year ago.

Discounters are the big winners

Unsurprisingly, discounters are the big winners from rising prices. According to Kantar, Lidl and Leclerc have both gained one point of market share since the health crisis, while the Casino group, which notably includes Monoprix and Franprix, is down by as much. “Today, even people who have the means find that an olive oil at €7 per liter is expensive. This is why discount is making such a comeback on the shelves »believes Thierry Desouches.

Praised by certain distributors such as Carrefour, the move upmarket in food risks taking a hit. In mid-November, the group headed by Alexandre Bompard also announced a 180-degree strategic shift, giving pride of place to private labels and hard discount, with the arrival in France of its Brazilian brand Atacadao.

At the same time, the group announced the launch of a local greengrocers brand, Potager City, which should be deployed in major cities. “Somehow, this new strategic plan acts on the polarization of society between a wealthy class, less affected by inflation, and which will be able to continue to consume more expensively and more responsibly, and a working class forced to return to lower prices. »emphasizes Philippe Goetzmann.

Reduction of references on the same product

If inflation persists, another trend could also prevail in the future: the end of the hyper-segmentation of shelves and the multiplication of references on the same product. The famous grated smoked ham with beech wood… In its major strategic plan, Carrefour mentions a 20% reduction in the references offered in hypermarkets by 2026.

“With the energy crisis, manufacturers and distributors will no longer be able to pursue this logic of excessive differentiation.explains retail specialist Olivier Dauvers. A logic that had undoubtedly reached its climax. » Price inflation will therefore perhaps have the virtue of limiting the inflation of products on the shelves.

6.2% inflation in November

Consumer prices rose 6.2% over one year in November, according to the provisional estimate made at the end of the month by INSEE. Over one month, the increase was 0.4%, after +1% in October.

Energy prices have risen the most over one year in November, with an increase of 18.5%, which slowed slightly compared to October (+19.1%) due to the less buoyant oil price.

food prices increased by 12.2% (+12% in October).

Soaring prices for fresh produce observed in October (+17.3%) slowed down but remained high, at 12.5%.

Inflation for manufactured goods in November stood at 4.4%, and that of services rose to 3%.

Source : BBN NEWS

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