Supermarkets and neighborhood shops: consumption accumulates 12 months of decline

Share This Post

- Advertisement -

The inflationary acceleration mainly affects neighborhood businesses. In February, the consumption of basic products (food, beverages, bathroom and cleaning products) in self-service and small supermarket chains decreased by 8.8%. As, local stores rack up 12 consecutive months of markdowns due to promotions and the impact of fair pricingwhich are concentrated in large chains and hypermarkets.

- Advertisement -

The data comes from a survey prepared by the consulting firm Scanntech, which measures the evolution of sales and prices in 680 local outlets. Demand is contracting but prices are not slowing down. In the first two months of 2023, Inflation in smaller business formats rose 11.4%, but “year-over-year rate exceeded triple digits: 104.7%”Scanntech says.

The gap between channels widened at the rate of distortions caused, above all, by the pricing policy undertaken by the Ministry of Commerce. Its flagship programme, Fair prices, favors the so-called “modern channel”, made up of the main supermarket chains, such as Carrefour, Cencosud (Jumbo, Disco and Vea), Changomás and Día, among others, whose market share has increased from 34% to 38.5% in the last year.

- Advertisement -

When all marketing formats are averaged, mass consumption fell by 1.6% in January and 1.1% in February, much better figures than those recorded in Asian and independent supermarkets. In mass consumption, indicates a study by the Nielsen consulting firm, it is distributed in a very fragmented universe of 286,300 points of sale, between shops, supermarket chains, supermarkets, kiosks and dragstores, perfumeries and pharmacies.

Scanntech’s measurement underlines that in the first two months of 2023 “all product families lose in consumption: food (-12.6%) as well as personal care (-13) are those with the greatest drop, while cleaning (-7 ,2) and beverages (-4.4) show more contained negative variations”. The negative trend has continued in the last 12 months.

In January, consumption in that channel fell by 7.3%, “accelerating levels of declines compared to previous periods,” says Scanntech. The contraction in sales in the so-called proximity channel recorded peaks in the months of August (-9%), September (-7.5%) and October (-11.1%). The decline in that quarter coincides with the entry into force of the new Fair Prices programme, devised by the current Secretary of Commerce, Matías Tombolini. Now February enters the list of the worst indicators of recent times.

The size of the surface has a particular impact on the universe of low-income sectors. “Only 15% of the poorest families consume in large supermarkets”, says economist Santiago Romero Manoukian, of Ecolatina. Chains have the lowest average prices, thanks to the combination of the Fair Prices plan, promotional activities and a wide range of payment methods, which also facilitate the financing of purchases.

“But in places further away from urban centers there is a greater prevalence of small businesses. Large supermarkets are not everywhere”Romero Manoukian clarifies. Availability and proximity are decisive factors in choosing where to buy. Another reason is that due to the loss of purchasing power of income, people split consumption and spend the bare minimum. “Supermarket shopping trip in February (average ticket) was $1,322 including 4.5 units,” Scanntech’s study shows.

Fair Pricing is limited in scope to the modern channel (supermarkets and wholesalers). The formula aims to establish reference prices for more than 50,000 products in agreements entered into with companies in 17 different sectors. This provides for a cap of 3.2% per month on increases against the delivery of dollars from reserves (the cheapest on the market) to pay for imports.

Inflation in 2022 was the highest in the last 32 years (94.8% year on year) and the beginning of 2023 shows signs of acceleration, which is verified by knowing the indicators for January (6%) and February (6. 6%)

Source: Clarin

- Advertisement -

Related Posts