“Stop inflation” is written on a red stop sign. “Forget inflation with Edeka,” advertises the supermarket on social media. Edeka has frozen the prices of 200 everyday products. Anyone who owns a so-called Germany card benefits from the offer. Since the prices of food in the food trade have continued to rise, more and more retailers, including the Edeka subsidiary Netto or the retailer Budni, are calling for such price promises.
In view of the rising prices in the retail trade, consumer behavior is also changing: In a recently published survey by the market research institute Appinio, almost 80 percent of those surveyed stated that they had noticed a price increase when shopping. If you consider the inflation rate in May of 7.9 percent compared to the same month last year, this is not particularly surprising at first. The prices for food for private households even increased by 11.1 percent in the past month compared to the same month last year. More than 83 percent of those surveyed stated that they are already turning to cheaper products in the food trade due to the sharp price increases.
Discounters benefit
The consumer thus buys differently than at the height of the pandemic, in which the supermarkets in particular were able to benefit. Because with closed restaurants and limited leisure opportunities, consumers were increasingly asking for products from full-range suppliers. Because in contrast to Aldi or Lidl, these have a much broader product portfolio.
“People wanted to spend more money on their own four walls,” says retail expert Robert Kecskes from the market research company GfK. Consumers are increasingly buying sustainable or higher-priced products, which are mainly available in supermarkets. But with the sharp price increases, many now lack the money. Instead of looking at the product range, these consumers look primarily at one thing – the price. And in times of inflation it should be particularly cheap.
One group in particular benefits from this: the discounters. Because nobody in the German retail landscape stands for cheap products as much as cheap Aldi or Lidl. According to the market research institute GfK, the discounters performed significantly better than the supermarket chains for the first time in a long time. “The discounters are currently developing better than the supermarkets,” agrees the trade expert Kecskes. According to GfK, the discounters are currently gaining market share again – at the expense of supermarkets and specialist shops. “Many people are unsettled by inflation,” says Kecskes. They would factor this uncertainty into their purchases and therefore want to save. That means: Instead of shopping in the supposedly more expensive supermarket, customers go directly to the discounter.
Own brands are growing
This is also due to the fact that discounters have many cheap own brands in their range. “People are switching from expensive manufacturer brands to cheaper private labels,” says the retail expert. They hope to save with this alternative strategy. According to the research institute, the share of own brands in retail sales in the first quarter of 2022 increased for the first time in years, and is now 34.6 percent.
But the supermarkets don’t want to give up their space without a fight. They also try to lure their customers into the shops with particularly cheap offers. Rewe, for example, went on a price offensive a long time ago and above all wants to continue to increase its entry-level price brand “Ja”. The retailer is said to have increased the Yes private label range to around 1100 products.
The fact that Edeka also wants to lure its customers with offers is already clear from the supermarket’s current campaign. The slogan is: “In every Edeka there is a discounter.” In the years before, Edeka wanted to differentiate itself from the discounters with its organic segment, the sustainability strategy and the wide range of products.
But this strategy is no longer sufficient when the motto is: Better cheap than organic. According to a survey commissioned by the German Institute for Food Technology (DIL), sustainability currently only plays a minor role among German consumers. According to GfK, organic manufacturer brands lost a good 11 percent in sales, while the cheaper private labels were able to show a 9 percent increase in sales. In June, Edeka announced that it would now also further strengthen its own brand range in the organic sector.
Meanwhile, the retail expert does not see an end to the price increases: “The trend will continue,” says Kecskes. “The prices will probably rise even further.” Lidl and Aldi also seem to expect this: In their current brochures, both advertise with plenty of offers to please their customers.
