This does not mean that consumers are buying more, they are paying more for everything. Pedro Pimentel, general manager of Centromarca, even ensures that these growth rates are “hollow”, because they correspond only to the inflation effect. “Less was sold, although more expensive, and the proof is that consumption retracted at various levels, from the purchase of cheaper products, maintaining the same consumption pattern, to the choice of complementary products, but of lower quality. And there is even a reduction in buying, with the consumer preferring to make more trips to the supermarket, but buying only what they need,” he says.
This also helps explain the “brutal growth” of the supermarket chains’ own brands, which recorded sales increases of 18.3%, almost double the market. They have always maintained double-digit rates since March, reaching an increase of 26.9% in December. On the other hand, articles from manufacturers’ brands only grew 4.5%, less than half of the market’s 9.6% year-on-year variation.
It is not surprising, therefore, that in terms of market share, the hard discount chains, such as Aldi, Lidl or Mercadona are the ones gaining most market share – it is a segment that grows 11%, against 9.3% for hypermarkets and 9.5% for small supermarkets – being, therefore, themselves one of the growth engines for private labels, since the preponderance of this type of product in these chains is substantially higher than in others.
The general director of the Portuguese Association of Distribution Companies (APED) speaks of a “highly complex” year for the entire distribution chain, with a generalized increase in prices. However, Gonçalo Lobo Xavier assures that only 35% of the real cost increase has been passed on to the final customer. “These are difficult costs for the consumer to bear, but it would be much worse if there had not been this effort on the part of companies,” he maintains.
Even so, he acknowledges, there are already “important losses” in fish and meat sales, with a higher consumption of poultry, eggs, and canned and other preserved products.
About specialized retail, which APED also represents, Gonçalo Lobo Xavier says that 2022 saw a recovery, with consumers being “increasingly rational” in the buying process, searching online for what they want and going to stores with pre-defined goals. “Although consumption is already very close to pre-pandemic values, especially in fashion, consumer electronics and cosmetics, impulse buying has decreased sharply,” says this responsible. Who considers that, despite the great uncertainty that marked the year, the sector proved to be “resilient”, with “some investment capacity, still, in the opening of stores and in job creation”.
Energy climbing slowing down
As for the outlook for 2023, APED says that some stabilization trend of energy costs and consequent effects on production costs are already beginning to be noticed. Gonçalo Lobo Xavier believes that this will begin to be felt in consumers’ wallets “by the end of the first quarter”.
The sector, he guarantees, “continues to invest in energy efficiency and clean energy, but also in training its human resources. “There’s a huge battle for talent that can only be won with innovation, modernity, and better salaries. And this was an effort that was seen, not only with the signing of the new collective bargaining agreement, which provides for an increase of almost 9% on average, but also by the individual efforts of the companies to share and distribute results.” Hold inflation, keep the supply chain working, without risk of stock-outs, and retain and attract talent are the major concerns of APED and its members for 2023.
Centromarca, on the other hand, highlights the fear of the effects of the recession. “We will continue to have loss of purchasing power, because the growth of inflation will not be accompanied by wage growth and it is natural that the market contracts,” says Pedro Pimentel. For this responsible, the big question is whether the summer will be, in 2023, “as strong” as it was last year, “helping to offset, a little bit, the losses in the domestic market.
From the manufacturers’ point of view, the concern is also in the growth of “white labels” that “seems to be there to last”, which may “create conditions for an increase in negotiating tension” between the food retailers and their suppliers. “We fear that this compression of the market and profitability may spill over into more exaggerated tensions and demands, and it is very important to make the authorities aware that they need to pay close attention to the market,” says Pedro Pimentel.
