A consolidation trend in the domestic supermarket sector will continue in 2017, Vasilis Korkidis, president of Hellenic Confederation of Commerce and Entrepreneurship (ESEE) said.
Addressing a forum on the supermarket sector, Korkidis said: “It is important that Marinopoulos group avoided bankruptcy at the last minute and that 12,500 job positions were saved, but equally important was to ensure that thousands of small suppliers of the supermarket company would be saved as well.”
He added that the retail commerce sector was characterized by the collapse of Marinopoulos SA and the fact that all other companies in the sector, large and small, shared the company’s sales. Korkidis noted that these developments could continue in 2017.
“There is an estimate that in 2017 the situation in the market will stabilize and based on this estimate, there is a prediction that large enterprises will draft their investment and business strategies from this year. If the situation stabilizes, the question coming from several sides is what will be the strategy of large retail commerce groups. The first estimate, looking more probable based on current data, is to have a merciless “price war” moving beyond any known practices. In my opinion, a competition battle will erupt but in a war that no one would want to lose, since a price war would mean losing profits and turnover for everyone. Sklavenitis Group, by acquiring Marinopoulos’ network, it is obvious that it would claim to take back lost turnover -if not all, at least a part of it. From their side, other supermarket groups, particularly large ones, will try to preserve turnover gained this year, or to lose as less share as possible. Each side will use every weapon available in this battle. It is clear that in such a pressing environment a tremendous amount of pressure will be exercised on medium-sized supermarket companies -with sales less than 300 million euros- while estimates does not exclude the scenario with foreign players taking a larger share in the market and a “bloody” consolidation of the market to continue in 2017,” Korkidis said.
He noted that the supermarket sector fell, so far, this year, with revenue down around 8.0 pct and volume down 12 pct, a huge rate meaning a loss of hundreds of million of euros. Korkidis added, however, that there were estimates that the fall was around 3-5 pct as some supermarket chains managed to report higher sales levels. A latest report by IRI for 2016 showed 11 categories to consumer products to ease, led by the dairy sector (-12 pct in value and -13.6 pct in volume), followed by packaged foods (-9.4 pct), frozen food (-8.3 pct), personal hygiene (-8.4 pct), household items (-7.5 pct), cooking (-6.6 pct), detergents (-6.4 pct), alcohol (-6.3 pct), snack (-5.2 pct), cosmetics (-4.0 pct), while private label products saw their market share to drop from 19 pct to 16.6 pct with total consumption less than 1.0 billion euros.
The supermarket sector is one of the most dynamic sector of the Greek economy. In the 2010-2016 period, the domestic market recorded negative growth rates, after a decade of positive growth, with the last six years the sector recording an average contraction rate of -2.4 pct despite a positive growth rate recorded in 2014.