New price war is looming in Spanish supermarkets

Due to the deterioration of the economy as a result of the pandemic and its impact on consumption, a new price war between supermarket chains is now looming. This has been predicted by heads of the supermarket sector and consultants specialized in food distribution, who say that the data are starting to show that trend. In fact, the brochures and posters in supermarkets reflect a much higher promotional effort than in previous years, with greater offers and discounts. In fact, the IRI consulting firm has found that prices in August have already dropped by 1.8%.

"Very few chains are going to resist the temptation to lower their prices; they are all preparing to do so," says the vice president of the Spanish Retail Association (AER), Alfonso Sebastián, who confirms that the groups are already working on the in-store merchandising materials to make their offers more visible and studying how to improve their positioning in the mind of the consumer.

"We are seeing a repeat of what we had in the 2008 crisis." He warns that some chains could have a bad time if they stay "on no man's land" and don't manage to stand out for their prices or their service.

In fact, he says that there is speculation within the sector of concentration movements, and that the recent purchase of Supersol by Carrefour may just be the start. "What has changed everything this time has been the pandemic, which has made some managers see the need of creating a network of proximity stores, instead of focusing on other (larger) formats," he says, predicting that more acquisitions are afoot in the retail sector.

The price factor gains weight
"We count on the fact that there is going to be a crisis, and that this will cause changes in the order of priorities when buying food, since families will have to adjust their budgets," says a sector leader, who points out that the price factor will gain weight, something that reports from Aecoc, Kantar and Nielsen had already anticipated before the summer.

He specifies, however, that a good part of the promotions and offers are launched by mutual agreement with the manufacturers –so part of the effort will affect them.

“In the previous crisis, we saw that consumers didn't change their shopping habits much, but looked for a cheaper option for each product, so that the most expensive brands are abandoned and other cheaper brands or promotional items gained ground,” explains the manager.



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