Food retailing in crisis?

Food industry professionals say food retailing is in a «tragic state» and several food categories have recorded a decline in sales ranging from 2 to 8 percent. The same sources say they are worried about the sector meeting even its minimum targets at the end of the year, although in November nine companies will raise their prices by between 2 and 10.4 percent. According to reliable data, in the year’s first eight months 19 products recorded a decline in sales volume. These are milk (-2 percent), refreshments (-3.5 percent), yogurt (-6 percent), pasta (-3 percent), beer (-5 percent), tomato products (-6 percent), pocket tissues (-8 percent), margarine (-8 percent), toilet paper (-7 percent), frozen vegetables (-5 percent), canned fish (-7 percent), soap bars/liquid (-2 percent), dishwashing liquid (-1 percent), shampoo (-0.5 percent), toothpaste (-3 percent), salt (-5.5 percent), house cleaning products (-1 percent), olive oil (-2 percent) and seed oil (3 percent). As a major chain official explained, all this decline has taken heavy toll on total turnover for supermarkets – a figure which may reach as high as 20 percent. There are many reasons for this trend, which is not fully explained by the financial problems consumers face. While yogurt and olive oil have been hit by a food crisis and high prices respectively, some say consumers have turned to discount stores and to small local shops, even though the latter charge more. Another cause may be the rationalization of purchases by consumers, since they have to serve more needs now. A retailer listed in the Athens stock market recently reported that even though the average family spent 22.5 percent of its income to buy food five years ago, today this percentage has shrunk to just 17.5 percent. There is also the growing preference for supermarket brand products offered exclusively at those stores, which represent as much as 10 percent of chains’ sales and increases. Yet everyone agrees that the drop in sales is related to the negative climate in the supermarket sector over the last few months, which has affected consumers’ attitudes. «Three-quarters of purchases in our stores are spontaneous and now this spontaneity is reduced,» a major chain representative said, adding that «certainly the effects of this climate will be seen to the full in the coming years.» But there is a contradiction here: Although consumers generally appear reserved toward supermarkets, they are also selecting brand products developed by each supermarket chain. The course of the market is characterized as tragic from January to August, but some recovery signs have since emerged. This, the industry suggests, does not really mean anything, since it is compared «with the bad last quarter of 2004.» Also, even though in the sector «they used to consider it a failure if the growth rate in old shops reached inflation levels, this is now considered a success.» The worry about the market’s course stretches beyond food retailing and also reaches production and trade companies. Sales lost by supermarkets are also losses for industries, especially when organized retail commerce is the main network promoting their products.