With the increased prices on the shelf and limited disposable income to be the most important challenge for households, the government has been moving in recent months with a barrage of interventions in order to manage inflationary pressures. In this context, the four new measures announced by the Minister of Development, with the aim of de-escalating high prices (reduction of subsidies to supermarkets, prevention of unjustified mark-ups, “clean” prices from the field to the shelf and a cap on the gross profit margin for baby milk), combined with the “permanent price reduction” initiative of at least 5% and the “household basket”, are already bearing fruit.

Speaking to the Athens News Agency the general manager of the Union of Supermarkets of Greece, Apostolos Petalas characterizes the de-escalation of inflation in recent months as an important development. “We are seeing a significant deceleration in both headline and food inflation and expect further deceleration in the coming months,” he says.

According to him, during the first month of the year, price increases were observed in certain categories of products, especially food, such as e.g. juices and especially orange juice. Olive oil is also a product that continues to see some appreciation, as do some cereal products. However, price reductions are observed in some cheese products and some other consumer products.

At the same time, the initiative of the Ministry of Development to stabilize the prices of 1,300 products, until at least May, continues to pay off, as Mr. Petalas reports. In fact, he notes that “these products have been reduced by 5% or more and at the same time the companies that sell them have pledged to keep the prices until at least May”.

Mr. Petalas underlines that “with the announcement of the measures by the competent ministry, to a very large extent, not only did the revaluations freeze, but at the same time large companies that had announced revaluations, suspended them. This shows that the measures are moving in a positive direction and have started to pay off.”

The “household basket” is gaining ground

One year after its implementation, the household basket measure is utilized by the majority of consumers. According to a survey carried out by the Consumer Goods Retail Research Institute (IELKA) in November 2023 with a sample of 1,000 consumers, the use of the basket by the consumer public has increased, from 28% to 61%, while the public who consider it offers nothing has decreased from 44% to 29%. Regarding the measures of the state to deal with the accuracy, the main measure desired by consumers is by far the reduction of VAT on basic foods by 81%, followed by products with a permanent price commitment by 10% and the market pass by 6%.

Research shows significant changes in consumption habits in various behavioral areas, which are largely attributed to product and service premiums. First of all, there is a clear tendency of consumers to save money for the purchase of basic goods and services and secondarily for money management. In particular, there is greater pressure to reduce spending on basic services and less on basic goods. Specifically, a percentage of 75% (versus 71% in January 2023) of the public declares that they have canceled entertainment expenses such as catering, vacations, trips, etc. 52% (vs. 50% in January) of the public say they have postponed maintenance and repair work, e.g. at home or in the car. 55% (vs. 55% in January) say they have cut back on food and grocery shopping overall. 48% (compared to 40% in January) say they have switched product brands. 28% (compared to 24% in January) say they have used money from their savings to cover their purchases. 28% (against 29% in January) have postponed paying bills or stopped paying their obligations. 15% (up from 11% in January) of the public say they have increased working hours or found a second job in order to increase their income, while 4% say they have taken no action at all to deal with inflationary pressures.

Increased turnover of supermarkets

Despite the increase in prices, supermarkets did not see their sales volume decrease during 2023. It is noted that based on NielsenIQ data, the total turnover of the organized food retail last year showed an increase of 8.9%, with inflationary pressures being the almost exclusive driver of the sector’s growth. Overall for 2023 fast moving consumer products increased their sales in value by 9.1%. It is noteworthy that while prices increased with the same intensity as in 2022 (+8.7%) demand showed a marginal increase, at +0.4%.

Turning now to the individual major categories of fast-moving consumer goods, food & beverages showed a positive trend of +9.0%, with demand remaining unchanged in relation to 2022. The categories that concern personal care products, with the difference that the more moderate price increase stimulated the consumption of these categories. However, the highest sales increase in value was recorded by household products as a whole, with their unit sales also increasing, by 0.8%. All bazaar categories (clothing, electrical appliances, books, tools, garden items, car items, home equipment, etc.) is a category that showed the lowest positive trend in terms of turnover, at +4.0%, while fresh and on balance products, on the contrary, showed the most positive trend at +10.2%.

Increase in online supermarket sales

Electronic supermarkets are on the way to growth, with Greek consumers choosing them for their purchases over physical stores. According to data from Convert Group, the total value of purchases from online supermarkets last year reached 306 million euros from 266 million euros in 2022, an increase of 15%. It is noted that this turnover does not include Q-Commerce players with their own warehouses such as eFood Market & Wolt Market which are constantly gaining share in the Greek market. Also noteworthy is the increase in the number of orders by 7%, as well as the average value of the products by 8%.

In terms of inflation, the company compared over 38,000 product codes sold in 2022 and 2023 and found that 14% of them saw sales price increases of more than 20% in 2023. In terms of categories, the highest price increases in 2023 were in laundry detergents with 19%, sugar with 18%, soft drinks with 17%. But there were also categories of products that saw devaluations in 2023 such as that of butter and margarine with 8% and baby skin care with 7%.

According to Convert Group, an interesting change in consumer behavior occurred in the second half of 2023 and after the decision of a major market player to increase the minimum order value for free delivery from 30 euros to 100 euros. Consumers gradually began to increase their average order to avoid the extra shipping charge and consequently the average value of the e-cart of the whole market increased from 77 euros in June to 89 euros in December of the same year.

There was also a 1 point increase in the percentage of spending going to private label products to reach 15% of all online purchases made in 2023.

Finally, Monday remains the most popular day for household online shopping, since 16.5% of total orders are placed on that day, while over 1/3 of total online orders are placed between 9pm and 9am, i.e. the hours when the physical stores of the supermarkets are closed.