Prices in supermarkets: "The end of the year will be sporty"

Emily Mayer is a Consumer Products Expert at IRI.

She prefers to speak of "tensions" on prices than of "war" of prices between the supermarket chains. Promotions are, according to her, determining to attract customers.

Are we witnessing the return of the price war?

EMILY MAYER.

Historically, the last price war took place in 2014 (-1.3%), 2015 (-1.2%) and 2016 (-1.1%).

There was then a two-year hiatus.

Since 2019, inflation had returned (+ 0.9%), especially on food products.

This inflation was still somewhat visible at the start of 2020. Since April, however, we have seen deflation, particularly in hygiene products (which have always been negative since 2014), but also in food, groceries in the lead.

In August 2020, one-year prices were down 0.23%.

The fall in prices is therefore back, especially for national brands, but it is more moderate than in the middle of the 2010s, in particular because the “Egalim” law limits promotions in terms of value and volume and serves as a safeguard.

This is why I prefer to talk about price tensions than about a new price war.

The key subject is that of the defense of purchasing power.

The price level of “back-end” products is certainly important, but less so than promotions, which play a decisive role.

Are there any more promos since deconfinement?

Yes, because there is a catching-up phenomenon

.

Witness, the number of prospectuses, which went from 176 between May 16 and June 30, 2019, to 215 over the same period of 2020!

The end of the year will be sporty because the attractiveness of promotions is a major element of a brand's price image.

Likewise, initiatives like those of the opportunity corners allowing “to help” the French will be important levers to stand out.

How will prices evolve over the next few months?

During confinement, the closure of restaurants and company canteens resulted in an increase in the turnover of large-scale distribution, which will inevitably decline in the coming months as well as in 2021. Over the months , brands will fight more and more to conquer market share, and therefore on labels.

Tensions on prices will therefore increase.