Rising prices: the French rush to hard discount stores

Rising prices: the French rush to hard discount stores
Written by madishthestylebar

Inflation is pushing consumers towards these “low-cost” distributors, but the anxiety-provoking climate linked to the war in Ukraine is also a lever.

Inflation for FMCG is now more than palpable. According to IRI panelist, the prices of these products increased by 1.5% in March over one year, all channels combined (supermarkets, hypermarkets, convenience stores, drive…). If the increase seems contained with regard to overall inflation measured by INSEE over the same period (4.5%)the fact remains that it crossed the 1% threshold, whereas it was only 0.58% in February.

A situation that pushes consumers to look for low prices. Through promotions, discount vouchers, changes in behavior but also by modifying their shopping locations.

400,000 additional customers in one month

Unsurprisingly, hard discount brands like Lidl or Aldi are filling up. From March to April, these stores would have welcomed on average more than 400,000 additional customers.

“We buy less and less in department stores”, explains a client at the microphone of BFMTV. “It’s a habit that came with the increase in prices,” adds another.

“We see that we see new customers, we have an increase in attendance. In a context of economic gloom, it is a windfall effect for us to have new customers”, confirms Jérémy Bourgain, manager a Supeco store (Carrefour).

A rather logical evolution but not necessarily paying off. Because all the studies show that it is the first price products that have suffered the most from inflation.

Stronger inflation in these brands

Still according to IRI, it is in the hard discount brands that the rise in prices is the most marked: +1.75%, followed by local shops (Carrefour city, Franprix, Intermarché Express, Petit Casino, etc.) with an increase prices of 1.66% in March. Then come the supermarkets (1.51%), the hypermarkets (1.46%) and the drive (1.12%).

However, these changes in behavior do not only respond to a price issue.

“When the consumer is worried about the economy and prices, then they need safe havens, that is to say, they take refuge in brands or retailers that they think are rather allies of their purchasing power”, analyzes Olivier Dauvers, journalist specializing in mass distribution.

Inflation should speed up to 3% in April and reach around 5% in the summer. Especially since “the impact of the war in Ukraine will not be visible until the beginning of the summer”, warns Emily Mayer, specialist in consumer products at IRI, who expects inflation of 5% to from June or July. “A level not seen since 2008,” she recalls.

Indeed, the government has decided to reopen trade negotiations to take into account the impact of the conflict in Ukraine, which should drive prices up a little more in the coming months.

Which products increased the most?

According to the IRI panelist, pasta is experiencing the largest price increase (+13.4% in March), ahead of mustard (+7.76%), oils (+7.36%), flours (+7.16%) and dried fruits (+6.72%). Corn (+5.1%), coffee (+4.5%), butter (+3.9%) and eggs (3.3%) are not spared either.

Olivier Chicheportiche Journalist BFM Business

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