Orange with multimedia services, published on Sunday 20 November 2022 at 07:00
Faced with inflation, Europeans are turning to discount brands and prioritizing their spending.
Inflation spares no one. Prices have skyrocketed around the world for months, especially in a Europe hit by soaring energy prices.
Among the most notable consequences, an increase in food prices not seen for more than forty years. To preserve their purchasing power, European consumers are trying to adapt their habits, especially at the supermarket.
Popular discount stores
It is rather a symbol: in the UK, German Aldi became the 4th largest supermarket in the country at the start of the school year, surpassing the 100+ year old Morrisons, behind Tesco, Sainsbury’s and Asda. The movement is common to all of Europe: the least expensive shops, or perceived as such, are currently winning many new customers.
“In France, we gain 500,000 customers in each period”, analyzed by the rapporteur Kantar, Michel Biero, executive director of purchasing at Lidl, explains to AFP. “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 E.Leclerc stores. To cope, Carrefour, considered more expensive by industry specialists, insisted in early November on its “discounted” offer when it presented its flight plan for the years to come.
In Spain Mercadona, halfway between a discounter and a supermarket (with large sales areas but a rather small assortment), holds more than a quarter of the market, well ahead of Carrefour (9.6%) and Lidl (5.8% ). But competition with the latter and with Aldi has intensified in recent months, according to Kantar.
Another reflection of consumers: a hierarchy of spending, conscious or not. “Everything that is a non-essential product, for example wine or champagne, honey, beauty” is in sharp decline, notes Stéphane Roger, of the Kantar rapporteur. Fewer sweets, fewer little gifts… It’s also on this type of purchase that the cuts are evident among customers. “Our non-food sales have clearly decreased,” confirms Michel Biero.
As what is less of a priority is deferred, growing children’s clothing continues to sell, but adult clothing is far 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”, says also Emily Meyer, expert on consumer products of the specialist company IRI. However, you recall that “not everything has to be linked to inflation”, this reflux is also explained by the increase in supermarket sales in 2021 when Covid was still interrupting meals away from home.
And what about catering? “Consumers plan to spend better, rather than at all, as 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 quite stable, eventually falling only 2.3% in 2009.
Daily bills reviewed
Telephone bill, car insurance, gym membership… Rather than “cutting spending”, as 60 million consumers say, who have dedicated a special issue to recipes to “regain purchasing power”, many consumers have sorted out their recurring expenses. “I called SFR to calm down and I got a discount of 5 euros a month,” confides for example Mathilde Guillerme, mother from Lille.
Mortgage renegotiation, home insurance… For 60 million consumers, earnings can amount to hundreds of euros per month for families.
If spending is scrutinized and prioritized, so are cash inflows: declining purchasing power amid runaway inflation is fueling wage demands across Europe, with nationwide strikes recently in Belgium and Greece, where “the high cost of living is unbearable”, according to the largest local trade union.