Filenews 23 April 2022 - by TheanoThiopoulou
This year, the family budget of thousands of households for purchases of goods for the Easter table and other related needs of the days passed through stress tests, while there is accuracy in prices admittedly and a significant reduction in the purchasing power of wages due to inflation (7.1% in March).
Two years in a row, the market across the retail spectrum, from clothing and footwear, food and beverages, to household equipment, is under daily pressure, either due to pandemic restrictions, or now for problems in the supply of raw materials and imported inflation. As soon as the retail trade went to find its feet, after the improvement of the epidemiological situation, the energy crisis appeared, with the final blow being given by the Russian invasion of Ukraine, with all the consequences: rising commodity and energy prices.
Andreas Papantoniou, commercial director of Papantontiou supermarkets and the executive secretary of the Pancyprian Association of Supermarkets, Andreas Hadjiadamou, express in statements to "F" their views on the new habits of consumers under the current difficult data, as they are now looking for more value in their purchases and turning to "private label" products, looking for more economical solutions.
Careful consumers
Mr. Papantoniou, commenting on whether consumer habits have changed during this period, due to the increase in prices, explains that "the price increases we have been seeing lately in consumer goods are the result of the price increases of several raw materials and the increase in energy and transport costs. I think the increased costs to the consumer would be much greater if there were no serious attempts to absorb part of this increase from all the intermediaries in the supply chain, such as producers, importers, distributors and supermarkets." We also see, he notes, "that the purchasing power of the consumer is gradually being reduced. On the one hand, we observe that the continuous increases in fuel and electricity, as well as in all other goods, significantly increase the cost of living, while on the other hand, wages are not easy to increase, due to the reduced turnover and the accumulated losses of many businesses due to the pandemic".
Taking into account the above, concludes Mr. Papantoniou, "we observe that consumers are beginning to be much more cautious and selective in their purchases. In particular, we saw products that had a large price increase having reduced sales, compared to other products that had a more limited appreciation. This means that consumers are willing to change their preference to a brand or product as this satisfies them. In addition, we have seen many consumers choose to make mass purchases on specific products, in fear of new increases and shortages."
Numb the market
This year many consumers, due to their accuracy, are shopping for the absolutely necessary and Mr Papantoniou gives the image of the market. "In view of Easter the market is numb although consumers usually wait until the last minute to do their big shopping. We note that the intense competition between supermarkets has kept prices on all the necessary products of the time quite low and this will help the consumer's pocket. Of course, if it were not for the problems mentioned above, the markets would have been much bigger, but I believe that the Cypriot consumer will spend a lot to enjoy the Easter holidays. Let's not forget that in the last couple of years we have not been able to celebrate as we wanted, due to the pandemic and the restrictive measures that were in place."
Consumer turn
The director of Papantoniou supermarkets also describes the new habits of consumers, as a consequence of the increases. "Recent research has shown that when there is inflation, the buying habits of consumers change and the search for more value in the markets becomes a primary goal. We see that they now compare before buying something and try to choose the most economical option. This is the logical consequence of increasing the cost of living and reducing purchasing power. Therefore, there is a tendency for the consumer to turn to the products on offer, as well as to private label products. Taking into account the above, our company constantly invests and develops quality and economical solutions, since we have on the shelves of our stores more than 4000 private label or exclusive import products. These products give the consumer the ideal choice that combines competitive prices and excellent quality."
The Cypriot attitude of life
The picture that the business world wants to paint is of cautious optimism that despite the price increases and the reduction in purchasing power due to inflation, consumers will get all the necessities that determine the Easter table, even in smaller quantities. The executive secretary of the Pancyprian Association of Supermarkets, Andreas Hadjiadamou, tells "F" that "as far as the Easter table is concerned and generally for each festive table, Cypriots do not differ much and this is evident all these years. Our experience in the market and through other crises that we have gone through in the past shows this. No matter how many problems there are and difficult circumstances that we occasionally face, the Cypriot or, if you like, the attitude of the Cypriot consumer in terms of how he spends the holidays traditionally with his family and his festive table remains the same. He may limit his purchases to some other products but as far as the festive table and his family gathering during the holidays are concerned, he does not want to miss anything. That seems to be happening again this year."
Antidote to the crisis is the private label
The new mores of consumer buying preference are private label products, i.e. non-branded products, mainly due to the fact that they have lower prices and become more attractive for purchases. But it's not just the no name products that consumers are chasing. Mr. Hadjiadamou says that consumers turn to products that are on offer or have discounts. "For several years now, I would say since the financial crisis of 2013, consumers have started to choose and turn to products that have discounts and offers. They began to compare prices and visit more supermarkets than one in order to complete their purchases and take advantage of the offers of supermarkets. They also began to trust products in addition to recognized brands, as well as private label products. Year after year, sales have begun to balance between branded and lesser-known products."
There is also optimism
The question that concerns is whether there will continue to be sufficient products and what the consequences of the Russian-Ukrainian crisis will be. At the moment there are no problems in supplying the market, nor have any deficiencies been observed as a result of the war, notes Mr. Hadjiadamou. "Our assessment is that they will not exist in the future either. The supply chain has been shown over the years, especially in the food sector, to endure and operate under any adverse conditions, with the best being the recent example of the pandemic and in the past. This is also an assessment of the European Union itself."
Pre-war delays existed
Mr. Papantoniou clarifies that "the problems in the supply chain, such as shortages of products from specific sources and the dramatic delays in transport, existed before the Russo-Ukrainian war, due to the pandemic and the exit of the United Kingdom from the European Union. The war came to make the situation even more difficult, since the countries involved play an important role in world trade. Indicatively, Ukraine and Russia have a share of 75% of global sunflower oil exports and 28% of global wheat exports. On the one hand, the war situation in Ukraine has paralysed all of the country's exports, and on the other hand the sanctions that western countries have put on Russia have caused large gaps in trade. All the above make the process of importing raw materials and ready-made consumer goods very complex and that is why there are some temporary shortages of products".
No one knows how things will turn out with catering
But what about the supply to the market of flour and sunflower, two products for which Russia and Ukraine have a tradition of exports, or whether there will be shortages on supermarket shelves or whether there are any thoughts of putting a ceiling on the purchase blocks of some products, as has happened in other countries?
As long as the war in Ukraine continues, no one knows how things will turn out, says Mr Papantoniou. "I believe that if the war continues for months there is a serious potential for shortages, at least until global trade finds alternative sources for these products. We have seen supermarket chains in countries such as Greece and Italy setting a maximum number of pieces in products such as flour, sunflower oil and sugar. At the moment here there is no decision to impose a cap on any product but we are monitoring the developments and in cooperation with our suppliers we will take the appropriate measures, with a view to protecting and serving all consumers", notes the director of Papantoniou supermarkets.
"Our assessment is that even if the Russian-Ukrainian crisis continues, we will not have a problem with the supply of flour and sunflower oil because there are enough stocks", notes Mr. Hadjiadamou. "These reserves can be the bridge to finding other markets and alternatives from various other countries. Already, both from individuals and from the side of the Government, from what we have been informed, they are moving in this direction. It is precisely for these reasons and for many others that we believe that there is no reason to need a cap on any products. We are confident that the supply and feedback will continue uninterruptedly and seamlessly."
