Local supermarkets have seen sales slump by a total of half a billion euros within a period of just one year, which is attributed to the reduction in household spending even on basic consumer goods, as well as to the aggressive pricing policy with constant price discounts and permanent offers.
This policy is continuing in 2013 with an offers war that includes discounts of between 10 and 50 percent and gift vouchers from the sector’s major chains, while market insiders say that in the first month of the year sales have contracted by about 10 percent year-on-year.
According to the latest available data presented by research experts Nielsen, supermarket sales totaled 8.99 billion euros in 2012, compared with 9.49 billion euros in 2011, which constitutes a decline of 5.3 percent. Nielsen data concern the stores with an area of at least 100 square meters (not including the Sklavenitis supermarket chain) in continental Greece, the Peloponnese, Crete, the Aegean and the Ionian islands.
Sales of fast-moving consumer products – i.e. high-consumption products that are frequently bought by consumers – declined by 2.9 percent in 2012 from the year before, dropping to 6.39 billion euros from 6.58 billion in 2011.
On the other hand, constantly decreasing disposable incomes have contributed to the continuing growth of own-brand products. Nielsen data show that supermarkets’ own generic products saw sales grow to 1.53 billion euros in 2012 from 1.46 billion a year earlier, posting growth of 4.7 percent on an annual basis. The share of own-label products in the general sector of organized retail trade of food amounts to 17 percent, while among major chains it exceeds 20 percent of their total turnover.
A key factor in supermarkets’ declining turnover has been the reduction in their prices, either in the form of discounts on the shelf or via promotional activities. According to data compiled by the Institute of Retail Consumer Goods (IELKA), prices including value-added tax posted an average decline of 1.4 percent in 2012 compared with 2011, while the drop amounts to 1.8 percent year-on-year not including VAT. The IELKA index is compiled based on the prices of 843 product codes, as published in the Development Ministry’s Price Observatory.
The price drop began in the second quarter of 2012 and was considerably greater in the third and fourth quarters of last year. This is illustrated by the data collected by IELKA, particularly in the period from March to December 2012, when prices registered a 3.1 percent decrease.
Notably, supermarkets resorted to extensive offers campaigns even in December, which in previous years would have been very unusual as the festive season traditionally sees higher consumption.
The offers war in the retail sector has taken Sunday newspapers on board as well, with supermarket chains linking up with popular tabloid papers to offer discount vouchers in order to expand their market share in the long term, even if that may be at the expense of turnover in the short term.
The greatest decline recorded in 2012 in comparison with 2011 amounted to 3.3 percent and was observed in cleaning products, as well as personal hygiene, while the drop in turnover from food sales amounted to no more than 0.5 percent on an annual basis.