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The variety of goods on supermarkets shelves is decreasing

15 January 2012 / 16:01:21  GRReporter
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According to sources, supermarkets and businesses have already started cutting the items they offer. First they have started with non-food goods and after that with the ones that are not of basic necessity such as cosmetics, because there is too much diversity.

"There is a very large number of items in all categories, both food and non-food products which do not meet the actual needs of users. We certainly can say that a huge "bubble" has been created and in many categories of goods saturation is observed ", noted George Baltas, professor of Economics at the University of Athens, and he stresses that this situation in times of recession, rather than bringing profit, leads to losses, which big chains want to avoid at all costs.

"The more items maintained the more the cost of storing, ordering and positioning increases," says the specialist.

President and CEO of METRO JSC Αristotelis Pandeliadis believes the reduction in the number of items is a logical trend of rationalization and not a sign of economic weakness. He also emphasizes that the number of offered products can be reduced in many categories, without significantly affecting the consumers. "For example, a brand of shampoo that comes in 14 different fragrances, can easily be reduced to two, without a problem", he said.

"This process is carried out both by supermarkets and businesses and often the two sides cooperate in order to be more effective," added Pandeliadis.

The same conclusion was reached also by Diamandis Masoutis, president of a supermarket chain, who predicts that in time some items will not be offered because there is no demand for them. He noted however that such a trend is observed mainly in non-essential goods.

Reduction in imports

Moreover, the market will begin to notice also a lack of certain imported goods, as some Greek companies will not be able to satisfy the requirement of foreign suppliers for much longer, because in order to purchase the products they need to pay in advance and in cash. This mainly affects companies with severe liquidity problems, which will be forced to terminate their relationships with foreign exporters. But some of the goods, for which there is demand, will remain on the supermarket shelves, because another company with enough capital will import them. Some brands will find themselves outside the market because their companies have gone out of business.

On the other hand, some categories of products and new brands can be developed, but they will carry something different.

Drop in sales

Meanwhile, 2011 sales in supermarkets ended with a negative sign and even the Christmas holidays failed to change the negative image. According to data provided by Nielsen, during eleven months of 2011 sales in grocery stores of over 100 square meters (excluding "Sklavenitis") have decreased by 2.5 percent to 8.6 billion Euros compared to 8.9 billion Euros during the same period in 2010. 2012 has not started well for the industry either, despite the massive promotions and sales.

It is estimated that currently sales in supermarkets have fallen by around 5 percent and the situation will get worse when the measure to reduce the 13th and 14th salary is applied, which will further reduce consumer purchasing power.

Categories, in which products will be reduced

Items for personal hygiene
Cleaning supplies
Alcoholic beverages
Pet foods
Snacks (e.g. potato chips)
Dairy products

Increase in private labels

Sales of generic brands continue to show progress, as more consumers turn to them deliberately, because they believe that their purchase is advantageous. It is estimated that today their share is more than 20 percent of the total market, and there are opportunities for further development. However, these products can never become equal competitors of the brands (as happens in other European countries like Switzerland and Scandinavia), which will retain their leading position on the market.

Changes and renovations in the field of food ​​trade

Significant changes and renovations in retail food trade are expected in 2012, as many supermarket chains will be forced to ally with powerful companies in order to survive. Eyes are turned mainly towards the chain Carrefour Marinopoulos, which according to market sources, has liquidity problems and is unable to repay its obligations to suppliers on time.

According to credible sources, despite the scale of the French company many businesses have already ceased cooperation with it and stopped the supply of goods because they are not paid on time and always asked for payment deferrals.

All this once again puts forward the scenarios for the departure of the French company from the Greek market.

The focus is also on the supermarket chain “Veropoulos", which since last year has been seeking foreign investors in order to strengthen its capital position. In any case, management's intentions are that it will retain control over the company and continue to grow both in Greece and in the Balkans, where the chain is present.

Development is expected from the chain "ΑΒ Vassilopoulos" which states that it is ready to buy companies in order to become a major player and rank first in the local retail trade in groceries.

Tags: crisis recession supermarkets demand cuts
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