At the Retail Day LATAM event held in Buenos Aires, the impact of the Government’s measures on consumer purchasing power was discussed. Food supply companies, supermarkets and market analysts gathered to discuss the challenges facing the industry. One concerning statistic revealed was a 15% decline in sales volume at large chains in April compared to the previous year, reflecting a general downturn in consumption.
Inflation, though slowing down, still exerts pressure on prices and wages, making recovery difficult for consumers. Javier González from Nielsen IQ highlighted this fact by stating that sales in large chains have seen an average decline of 18% in the first three months of the year. This is because consumers are being more selective in their purchases, opting for cost-effective options and reducing discretionary spending.
According to Osvaldo del Rio, president of consulting firm Scentia, this decline is due to a 13-14% drop in income in the first quarter. Projections for the rest of the year do not look promising, with estimates suggesting a 9% year-on-year decrease in mass consumption. In response to these economic challenges, brands are offering more products at lower prices to gain market share. Some product categories are being sacrificed as consumers prioritize essential purchases over luxury items.
The trend of offering more products at lower prices is becoming more common as companies adapt to changing economic conditions. Brands with lower prices are gaining market share while consumers are gravitating towards cheaper options or smaller quantities of leading brands. The shift in consumer behavior is a direct response to economic pressures affecting household budgets.
Overall, strategies to address declining purchasing power and changing preferences are being implemented by companies in the retail industry to navigate the uncertain business environment. Companies must find ways to innovate and adapt quickly if they hope to survive and thrive during these challenging times for consumers and businesses alike.