The impact of inflation – which has accumulated a 276% increase in the last year – has caused, in sales in supermarkets and warehouses, a shift in demand towards so-called second brands or “white” brands, that means, lowest priced products which allow consumers to reduce the final purchase expense.
This was revealed by the Nielsen IQ company in a study on trends in consumption in Argentina in times of crisis. The report analyzes the behavior of the local market in response to the worsening of the economic crisis.
This consumer shift towards second and third brands is linked to a significant drop in wages in the face of inflation which is reflected, in turn, in a strong reduction in purchases in general termsespecially since it started this year.
According to the consultancy firm Scentia, for example, the the drop in mass consumption across the entire market was 3.9% in the first two months of 2024. Official data also show a decline: in January the Indec measured a drop in sales in supermarkets of 13.8% on an annual basis and of 3.4% compared to December. Hence, the level of consumption On the shelves, in quantity it was the lowest of the series available since January 2017.
Therefore, with different strategies, supermarkets intensify the offer of the cheapest products especially those that carry the supermarket brand. The goal is support sales and position yourself better on the market.
“In this context, according to the study, supermarkets’ own brands are strengthening with a better performance than the average of all product families, with the exception of drinks, (which fell by 39%). The biggest jumps in the consumption of these own brands were given In food (29.4% in the two-month period December-January 2024), cosmetics and personal hygiene products (25.9%)”.
According to the report, “the economic situation in Argentina continues to worsen since May 2023, showing worrying similarities to the crisis experienced in 2018/2019,” it compared.
Like the growth of second brands, observes the consultancy firm by analyzing the data for the two-month period December-January 2024 a worsening of the level of consumption greater in the interior of the country than in the Buenos Aires area and in the suburbs.
A detailed analysis of market behavior reveals that, despite the crisis, Supermarkets are the channel that best “resists” the decline, even if the elimination of Fair Prices produced a sharp slowdown in consumption in the two-year period December-January.
This channel “gained relevance in 2023 and is still observed in the short term, its dominance despite being the one that increased prices the most in December and January 2024, achieving a price increase of 230% and between 15 and 25 points higher than the rest of the channels,” according to NielsenIQ.
In January 2024, self-service wholesale shops and supermarkets recorded a sharp increase in prices and the sales performance was also affected. Warehouses and self-service shops have also suffered a strong contraction throughout the country in the last two months compared to the same month of the previous year, “with the suburbs and Buenos Aires plus the south of the country where the decline has been more pronounced” , according to the consultancy firm.
The report also highlights the importance of omnichannel in times of crisis, urge companies to improve their pricing architecture and promotional effectiveness to drive further increases.
“Understanding the elasticity and effectiveness of promotions is critical to ensuring offer the best price and best promotion to get bigger increases. It is important to correctly convey product features and test consumer perception before implementing significant changes in the portfolio,” suggests Romina Lucanera, Customer Success Analytics Manager South Region at NielsenIQ.
Finally, another data provided by the GfK company, which has been producing the Consumer Life ranking in 18 countries since 2018, reveals that in Argentina 62% of the population believes inflation and high prices are its main concern, a difference of 28 points compared to the rest of the countries examined. Crime and anarchy follow with 42%. Third, 29% are worried about having enough money to live well and pay bills.
SN
Source: Clarin
