Orange with Media Services, published on Sunday, November 20, 2022 at 07:00
Faced with inflation, Europeans are setting their sights on discount brands and prioritizing their spending.
Inflation spares no one. Prices have been skyrocketing around the world for months, especially in a Europe hit by soaring energy prices.
Among the most notable consequences, a rise in food prices unseen for more than forty years. To preserve their purchasing power, European consumers are trying to adapt their habits, especially at the supermarket.
It’s quite a symbol: in the United Kingdom, the German Aldi became the 4th largest supermarket in the country at the start of the school year, overtaking the more than 100-year-old Morrisons, behind Tesco, Sainsbury’s and Asda. The movement is common to all of Europe: less expensive stores, or perceived as such, are currently winning many new customers.
“In France, we gain 500,000 customers over each period” analyzed by panelist Kantar, explains to AFP Michel Biero, executive director of purchasing at Lidl. “The brands that work best are Leclerc, Aldi, Lidl and Hyper U which are the cheapest today”, also estimated Michel-Edouard Leclerc, the president of the strategic committee of the stores E.Leclerc. To cope, Carrefour, considered more expensive by specialists in the sector, insisted in early November on its “discount” offer when presenting its flight plan for the years to come.
In Spain, Mercadona, halfway between a discounter and a supermarket (with large sales areas but a fairly small assortment), holds more than a quarter of the market, far ahead of Carrefour (9.6%) and Lidl (5.8%). ). But competition with the latter and with Aldi has been heightened in recent months, according to Kantar.
Another reflex of consumers: a hierarchy of expenses, conscious or not. “Anything that is non-essential product, for example wine or champagne, honey, beauty” is down rather sharply, notes Stéphane Roger, from panelist Kantar. Fewer sweets, fewer small gifts… It is also on this type of purchase that the cuts are obvious among customers. “Our non-food sales have clearly dropped,” confirms Michel Biero.
As what is less of a priority is postponed, clothing for growing children continues to sell, but adult clothing is much less successful. The euphoria experienced by DIY and development, in full swing during the Covid-19 epidemic when everyone, confined to their homes, took care of their homes, has subsided.
“In all European countries, the volume of sales falls with inflation”, also says Emily Mayer, expert in consumer products of the specialized firm IRI. However, she recalls that “everything should not be linked to inflation”, this reflux can also be explained by higher supermarket sales in 2021 when the Covid was still disrupting meals away from home.
And what about catering? “Consumers plan to spend better, rather than not at all, like in 2008,” said Maria Bertoch of research firm NPD Group. During this previous inflationary crisis, in Germany, Great Britain, France, Italy, Spain, sales in this area were rather maintained, only falling in the end by 2.3% in 2009.
Daily bills scrutinized
Telephone bill, car insurance, gym membership… Rather than “cutting back on shopping”, as 60 million consumers say, who devoted a special issue to recipes to “regain purchasing power”, many consumers have sorted out their recurring expenses. “I called SFR to get over my nerves and I got a 5 euro discount per month”, confides for example Mathilde Guillerme, a mother from Lille.
Renegotiation of mortgages, home insurance… For 60 million consumers, the gains can amount to hundreds of euros per month for households.
If spending is scrutinized and prioritized, the same goes for cash inflows: the decline in purchasing power against a backdrop of galloping inflation is fueling wage demands across Europe, with national strikes lately in Belgium and Greece, where “the high cost of living is unbearable”, according to the largest local union.
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