The supermarket sector, whose decline in turnover during the six-year recession from 2008 to 2013 was relatively small, is now suffering significant losses, affected by the country’s financial hardship and the political uncertainty that reigned at least up until last month’s elections.
What is worse for the food retail sector is that this new blow in 2015 came just as the market had started to look up last year. The decline in demand, combined with the capital controls, which have strained relations between retailers and suppliers, has already had an impact on the sector, with a number of stores on the brink of shutting down, layoffs threatened and a further concentration on the horizon.
According to data from market researchers IRI, supermarket turnover in the first eight months of the year posted a drop of 1.9 percent from the same period in 2014. A year earlier the market had stabilized (showing a marginal 0.1 percent decline from the January-August 2013 period), with the prospects for a return to growth leading all major players to significant investments, such as opening new stores and acquisitions.
The decline in turnover is mainly a result of shrinking demand and not a drop in prices. The IRI figures show that sales volume fell 1.1 percent while prices per volume unit decreased 0.8 percent on a yearly basis. In total, the value of sales fell 1.8 percent in 2014, but this was primarily due to the 2.6 percent price drop per volume unit. In contrast, sales volume had posted a year-on-year recovery of 0.8 percent as the economy had started to rebound in the second half of 2014. Even in 2013, a year that was indeed difficult, sales volume had decreased by just 0.1 percent.
In terms of turnover, August was the second-worst month for supermarkets this year, posting a 4 percent annual decline. This is attributed to the dramatic shift in consumer behavior recorded after the start of the 23-day bank holiday, the introduction of capital controls and the widespread fear of a haircut on deposits or even a Greek exit from the eurozone.
In other words, sales declined in August because consumers had already filled up their cupboards and refrigerators in the runup to the July 5 referendum, just after the government closed the banks and imposed the capital controls. In that week, from June 28 to July 4, supermarket sales soared, posting a huge annual rise of 37.6 percent. The fact that many people were shopping for the long haul was evident in the categories of food whose sales posted an increase in the first eight months of the year: These being frozen food (up 6.3 percent) and standardized food (up 4 percent).
In the weeks that followed the July referendum as well as the first couple of weeks in August there was a considerable decline in sales, ranging from 0.5 to 10.8 percent, depending on category.
Researchers attributed the 2.9 percent drop in supermarket turnover in the week from August 9 to 16 to a great extent to the rejection by a large number of SYRIZA deputies of the government’s bailout agreement with its creditors, which also led to the breakup of SYRIZA and the September 20 snap elections.