I am sure we have all read the many articles on the inflationary environment in FMCG.  These articles are heavy on attention grabbing headlines, quotes from consumers paying significantly more for their groceries and references to the macro government inflation tracker. 

But what is really happening and how are retailers setting prices?  We analyzed our pricing database containing billions of datapoints from hundreds of retailers and collaborated with our friends at NielsenIQ to find out:

  1. Shelf prices have risen by 1.1 pts. in the last 13 weeks.  Year over Year everyday prices are up slightly, promotion depths are returning but promotion support is still down significantly leading to higher average prices paid by consumers.    
  2. Most retailers are seeing a 0.5-1.5 pt. increase in price, with Walmart improving their price position relative to the market.  Regional Retailers with very strong shares in their market are pricing on the higher end of this range, potentially looking to recoup margin and pay for increased wage costs when faced with less competition. 
  3. Promotion intensity has increased significantly year over year, but has not fully returned to pre-pandemic levels.  As an example according to NielsenIQ research during the pre-pandemic period nearly 1/3rd of units sold in the average Grocery store were sold on promotion.  Today less than 30% of items are sold on promotion.
  4. Promotion depths of discount are still significantly below historical levels as promotion intensity has not fully returned.  Retailers you might not expect are turning to promotions however, on their recent earnings call John Furner was quoted as saying “we had about 30% more rollbacks in stores than what we would have had a year ago.” 
  5. Price increases are broad-based across the store.  Non-Consumables however are seeing slightly higher price increases YoY than Consumables.

Many suppliers have announced additional price increases that have recently or will shortly be going into effect so we will continue to monitor this inflationary environment closely.  To better understand the price inflation specific to your market don’t hesitate to reach out to us for help.

error: This content is copyright protected.