The newly introduced price caps by the government force shops to limit the quantity which customers can buy. Without limitations, the cheap prices would cause shortages as people would buy up everything. The government intervention caused upheaval in the market resulting in unusual purchasing trends. This turbulence has caused supply chain issues and the future seems uncertain.
A shop can be big or small, the economic crisis affects everyone. The price caps are only good for the populous, but even they might face shortages, so nobody will be unaffected. From Index.hu‘s new report we can get a better understanding of how retailers try to deal with the situation.
Upheaval in the market
In one of the largest franchises, for example, the trends became unsustainable. Márk Maczelka, SPAR’s communication director told that they sold three times more from certain products. In the case of sugar, they have already sold the annual quantity just during the summer. The sale of potatoes has doubled since the introduction of the price cap. Although, the sale of eggs remained unchanged so far. Many shops had to introduce limitations so they would not run out of available products.
Just in the case of SPAR, the losses can be around HUF 10 billion (EUR 24 million). The price caps cause growth in the sales of cheap products, while they cause a decrease in the sales of products that have no price caps. The same is true for Auchan, where they reported a 20-80 percent increase in the volume of the sales of price-capped goods. They are the last franchise that did not limit the number of eggs and potatoes that customers can put in their baskets.
The hunt for cheap products
Due to inflation, people aim to find the cheapest available options. There was an increase in the number of transactions, but at the same time, people buy less during every visit they make. Discounted and promoted products see greater interest because of the lowered prices. As supply chain issues become more prominent, long-term import agreements between retailers and suppliers turn out to be more valuable.
Fortunately, the Christmas season seems promising so far. According to predictions, there will be a decrease during the holiday season too. Current statistics show that compared to last year, the number of transactions increased by 34 percent. Yet, the quantity of the sold products decreased by 8-10 percent. The Christmas season matters a lot and retailers can only hope that more people will settle for quality products.
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