Greece’s Development Ninister, Kostas Skrekas, announced a regulation that will abolish the practice of promotional actions offering products “1 1” at supermarkets.
He claimed that this supermarket practice results in citizens “stocking products they don’t actually need.”
“Instead of buying one a shampoo, they are forced to purchase 1 1 on sale when they only need one. Ultimately this does not help to have a consistently low price
to the products,” Skrekas explained.
The Minister is considering a restriction on promotional actions through the definition of a maximum percentage of volume and value of a product that will be allowed to be sold under an offer regime.
The ministry has reportedly three objectives: firstly, that
- price reductions to a more permanent nature, secondly, that
- consumers can more easily compare prices between products and between supermarkets
- to achieve greater transparency both in pricing and in relationships between suppliers and retailers.
“The system «every day low price» is underway, Minister Skrekas heralded.
The project presents several difficulties, as it essentially resembles the “clean prices” measure that has been announced many times by many of Mr. Skrekas’ predecessors, but never went ahead. However, discussions have already begun between the ministry, the suppliers and the supermarket chains, reported daily kathimerini.com.
According to the daily, the basic scenario that the Ministry of Development is considering is to set a ceiling on the volume of a product that can be placed under promotional action regime at around 30% per year.
The second “cutter” that will be introduced, based on the legislative regulation being processed by the competent ministry, is the percentage of the value/cost of the promotional action.
If, for example, today the cost of tenders amounts to 30% of the value, this should be legislated up to 10% and the remainder incorporated as a permanent price reduction. Of course, in order to ensure the above, the mechanism of the ceiling on the gross profit margin should be maintained, which the ministry has already announced anyway, while other safeguards are being sought.
It is being considered to set a ceiling on the volume as well as the value of the product that will be placed under promotional action regime.
It is worth noting that today approximately 70% in value of sales in supermarkets is sold under some promotional scheme, including private label products, which, according to the political leadership of the ministry, actually leads to misleading the consumer.
Especially since few consumers check the unit price in order to compare whether it is really worth it to them to buy a product that is on sale. In fact, consumers, thinking that the offers e.g. of the “1 1 gift” type benefit them, they often end up buying larger quantities than they really need.
The tricks of multinationals to sell expensive
Through the legislation to limit promotional actions, the Ministry of Development believes that it can bring about greater transparency in the relations between suppliers and retailers, a relationship in which the well-known credit notes for the benefits and discounts of suppliers to retailers play a central role.
In its investigation in the supermarkets, which was completed in 2021, the Competition Commission had pointed out, among others, that “it has not been clarified whether the benefits in question (benefits – discounts of suppliers in the chains) are passed on to consumers in the form of of lower retail prices they pay, especially if it is taken into account that the discounts/benefits in question are generally unsystematic and ad hoc (i.e. not related to the pricing time of the products concerned) and are not directly included in the purchase cost at the time the products are supplied from supermarkets”.
It is recalled that the Development Ministry fined four multinational companies active in the country for profiteering in 2021.
PS Let me get it straight: in a country with free market economy and consumers’ free will, a minister wants to get into our bathroom closets and forbid we stock shampoo, toothpaste or cleaning products.
In a country where consumers struggle with stuck income and face exorbitant prices in the last years whether due to the war in Ukraine, Israel, Sudan or elsewhere in the world – so the traders’ claim – , a minister underestimated consumer believing they are not in position to read on tags the exact unit price.
In a country where the governmental decided after 4.5 years in power to finally deal with the issue of constant price hikes – not only in supermarkets – the PM Kyriakos Mitsotakis and Development Minister visited the sites of ‘shame’ probably for the first time in their lives.
Last weekend Mitsotakis and Skrekas checked the 5% reduction tags the government forced the supermarkets to implement for six months
And therefore they were not able to find out that the 1 1 or other offers are promotional actions not set by the supermarkets but by the suppliers.
The slogan “Every day low price” means we have to run daily on a super to catch the special offer, while majority of consumers makes its purchases once per week.