Great distribution : the labels valsent, sales are stagnating

A box of dumplings to vegetables free to a purchased, a packet of spaghetti and offered to both put them in the basket… Impossible, as soon as one enters a store, not to have the eye attracted by the promotions of all kind that abound on the shelves. In a highly competitive environment, the big names in distribution have multiplied in recent months this type of operations in trying to nibble market share.

Not less than 4 260 campaigns (flyers, operations, birthdays, etc) have been carried out by all general-purpose banners in one year, recorded at the end of June, compared with 4 of 153 a year earlier, an increase of 2.6 %, according to data of the specialized firm A3Distrib. The pressure is increased further in 2017, with an increase of 6.7 % between January and the end of August.

Carrefour has made its weapon of choice for trying to catch up on Leclerc (their respective market shares are 20.2% and 21.1 %, according to the research firm Kantar Worldpanel, KWP). At the end of August, the chief financial officer of the French leader in the distribution had the color : “We have started to invest in the prices with the intensification of promotional investments of the group,” he said during the presentation of the results of the first half.

Yet, despite the inclination to do waltz of the labels, the sales volume of consumer goods fell by 0.1 % in 2016, and 0.5 % between January and the end of September 2017, according to KWP. A recession that has never occurred, except in 2008, due to the financial and economic crisis (− 1.2 per cent year-on-year). The price war between brands for nearly four years would have lost in intensity.

Commitment to dividends

“The sensitivity of consumers to such operations remains high – more than one basket on three contains at least one article – but it seems to have reached…

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