Supermarkets and Suppliers: The Winners and Losers of the New Measures against Inflation

Greek suppliers and supermarkets are baffled with the implementation of the recent measures by the Ministry of Development to combat inflation, without negatively impacting their profits.

According to market sources those who adjusted their prices before Jan. 10, 2024, are considered the “lucky ones,” as they will not be subjected to the three-month ban on promotions.

Given that consumers have been “trained” to shop through promotions, supply companies are not willing to risk losing this “asset.” Therefore, some major suppliers as reported by retail executives have withdrawn the price lists they had communicated to supermarkets after Jan. 10, which included price adjustments.

Even if operating costs increase significantly, as in the case of orange juice, causing a severe headache for industries with prices rising by 150%, those who acted early, have the upper hand.
A characteristic example is the Epirotiki Bottling Company, without having managed to increase wholesale prices, it withdrew the price adjustments for orange juice it had given to supermarkets, following the regulation prohibiting any promotional activity for three months.

There is also the measure stipulating that in 12 product categories, suppliers must reduce the initial price to at least 30% of the sum of credits, discounts, or other benefits granted to retailers in 2023 based on the initial price as of December 31, 2023.

However, some supermarkets are raising concerns about reducing their already small profit margins, asking suppliers to increase their allowances, pointing out that the industry had a net profit margin of 1.5% on turnover in 2022.

The Greek industry, is already expressing fear of “small players” being marginalized as they lack the financial capacity for more allowances, such as participating in advertising flyers.