Inflation on food products: who benefits from the rise in prices?

We compared the prices of four big brand products, in Clamart commune of Hauts-de Seine in the south of Paris.

Four brands within a radius of just 1.5 kilometres: Carrefour, Casino, Super U and Lidl. On our shopping list: Camembert, ham, pasta and toothpaste. First observation: our Camembert is sold for 1.89€ at Lidl, up to 2.59€ at Carrefour. That is a difference of 37% between the least expensive and the most expensive of the four brands. For ham the price ranges from 2.23€ at 3.55 € i.e. up to 59%% difference.

Prices are freely set by each brand

First explanation: the prices are freely set by each brand and they can vary from day to day. In this Casino supermarket, for example, the manager explains to us that the prices are set by the group’s management and that she has no control over them: “Everything is automatic. The head office launches the prices on a software and everything goes back to the checkout at night, on the labeling.”

But then why do some brands display higher prices? Why do you sometimes pay more for a product in 2 neighboring supermarkets?

Another explanation: negotiations between supermarkets and manufacturers. Silvia Bravard-Meunier, v.ice President and negotiation expert at ADN Groupe, knows something about it. She accompanies the suppliers in their “arm wrestling”, she says, with the brands. And the result of these discussions will determine the price of the product at checkout: “These negotiations are reputed to be very tough, even reputed to be the toughest in the world from a commercial point of view. There are sometimes certain drifts, aggressiveness, threats and ultimatums.”

Retail profitability down 1% since 2019

In this period of inflation, would some brands favor an increase in their margin to the detriment of the consumer? According to a recent report by the General Inspectorate of Finance, the profitability of large retailers has decreased by only 1% since 2019. When that of the agri-food industry has “significantly decreased by 16%“.

Variable prices depending on the catchment area

The subject of margins is a secret that supermarkets are careful not to reveal. But we managed to get some answers. Super U, for example, assumes to sell certain items more expensive than its competitors in the same geographical area, a popular product will sell even if it is more expensive. For this member of the brand’s management: “Each store remains free to do what it wishes with its in-store prices. And go get the margin where he can. Of the 15,000 references of a store, the margin rate is obviously not the same. There are products that we will sell with a low margin and other products on which the margin will be higher.”.

High operating costs obviously affect prices

Direction of Crossroads

at the eye of 8 p.m.

On the side of the Carrefour group, the management offers another explanation. The price difference observed between our four brands would also be linked to the operating cost of the stores: “Prices are not the same in all stores, depending on the size of the establishment. Salary conditions also play a role since employees are paid over 14 months. High running costs affect prices, of course.”

Among our four major brands, Lidl is doing well with ham in particular and explains why this product costs up to 59% less than the competition: “We only order one national reference – which the French acclaim – for our 1600 stores. It’s volume and therefore low prices”

According to a recent study, the average difference in checkout prices between the most expensive and the least expensive brands has historically never been greater.