Price cut benefits consumers

18. 11. 2012

Careful preparation before you go shopping fast-moving consumer goods is worth.  Competition fight between supermarkets leads to big sales, which are good for consumer´s wallet.  Stores earn a living by people, who don´t care about sales.

Monitoring system of ppm factum surveys price development in stores and looks at real prices for long time. Constant and the highest prices of products which are  in basket of 22th the most purchased fast – moving consumer goods are weekly monitored by methodics of ppm. Albert Hypermarket, Albert Supermarket, Billa, Globus, Interspar, Kaufland, Lidl, Makro, Norma, Penny, Tesco Expres, Tesco Hypermarket and Tesco Supermarket stores were monitored in the period between September 2011 and September 2012.

The whole development of market was really dynamic in the last year . It was fundamentally influenced by change of value added tax (VAT)  and rise of production costs at the suppliers side. Strategy reactions of stores are different in the monitored period. Generally the long-term trend of making price higher asserts together with the reduction of amount of sales. This trend was “compensate” by attractive presentation of discount actions. Discounts makes really interesting offer for customers and also significant sales for stores.

The development of constant and special prices is opposite. There is easy to seen the trend of  “scissors opening” in all chain stores across the market. The average between constant price and price in action,which means total discount  of standart shopping basket,  was 26% in fall 2011. In the basket with fast-moving customer goods (according to ppm methodics) had customers chance to save at least  200 CZK. It means, that customer pay 572 CZK at action prices instead of  770 CZK at constant prices.

At the end of 2011, before VAT change, stores made constant prices higher. It makes illusion, that the rise of the prices is not so high at the begginig of the year. During the first months of the year 2012 the rise of the constant value continued but it seems to be normal due to tax rise. Due to overall increase of prices stores could afford make prices lower and seemingly defy rise of VAT at the turn of  March and April.

It is clear that discounts in actual monitored season are getting higher in the first comparison. But it is clear too, that the lost profit (due to action prices) stores do not let go and slowly compensate it by getting constant prices higher. Average constant prices in ppm´s standart price basket in September 2012  shows annual increase of  6,2% and climbs to 818 CZK. Prices offered in discount actions were getting lower at the same time. The total presented discount, which means difference between constant prices and the lower action prices, take about 34%, action prices of ppm´s price basket is 542 CZK.  The stores thus achieves the effect of increasing discounts. A customer who pays attention to discount prices offer, has opportunity to save even 280 CZK in common purchase of goods. Trend of making prices lower in action is moderately dynamic than increase in constant prices. The total lowest action price decreased by 5,2% in year comparison. This difference between basic prices and action prices rise speed is the ground of economical success of chain stores.