Supermarkets in Spain have been stunting with offers in the first months of 2024. They do this with the prospect of falling costs. The most ground-breaking move was that of supermarket chain Carrefour, which promised a permanent price drop for up to 500 private label products. In doing so, Carrefour goes a step further than a number of competitors who have offers.
In addition to the French supermarket, Dia, Alcampo, Eroski, Consum and Ahorramas have also made offers. They offer hundreds of products for one or two euros, but there are also other promotions, such as getting two, paying one.
Commodity prices fall
“Most commodities are going down. And if costs go down, you have to pass that on in the prices,” business sources explain. There is a lot of pressure within the industry. Reason enough for the distribution sector to get the message of price reductions across.
Food inflation
Inflation for food and non-alcoholic beverages was 7.3% in December. That’s half the percentage at the beginning of 2023. While it was still well above the headline CPI of 3.1%, distribution is using this progressive decline to defend that they are cutting prices whenever possible.
2024 year full of offers
“This year, we expect more promotions and offers,” says Patricia Daimiel, NIQ [formerly Nielsen’s] Managing Director for Southern Europe. A trend that started in the second half of last year, after prices remained stable after months of increases.
“Distribution in Spain is very competitive,” says Daimiel, prompting operators to react to the commercial moves of their rivals. The expert rules out that Carrefour’s move could unleash a price war that, in a general way, will lead to an indefinite drop in prices.
Margins within distribution channel
“Distribution is still suffering from margins, but it also has to deal with the need to strengthen its price image,” says Bernardo Rodilla, Head of Retail at Kantar Worldpanel. And this in a context of slowing inflation rates and a price-conscious consumer.
“Offers are a lever for consumers to respond. We all have prices in mind,” says Patricia Daimiel. “One-off initiatives can lead to more traffic to stores, generate more repetition, that’s what it’s all about. We have become less loyal. That’s why companies need to be consistent,” she concludes. One example is Mercadona, which ended up being the biggest winner in the sector after a difficult year.
