Food Prices Remain Stable: Edeka's Outlook for 2023
Grocery prices to decrease, announces Edeka - Supermarket chain Edeka anticipates an end to escalating food prices.
Good news for food lovers! Supermarket giant Edeka predicts that food prices will primarily stay on an even keel this year, as per the CEO of its largest regional company, Minden-Hannover, Mark Rosenkranz. He shared this optimistic view during the annual press conference in Minden.
A breath of fresh air after the price hikes in 2022 and early 2023, inflation seems to be returning to what we consider normal levels. However, Rosenkranz acknowledges that some exceptions exist, like the historically high prices of coffee. But, on the flip side, there are products that have become more affordable again, such as cooking oil and even chocolate and butter.
In 2022, Edeka Minden-Hannover, despite a shaky economy, managed to boost its revenue by two percent to 12.24 billion euros, partly due to increased prices. There was also an increment in the quantity of goods sold. However, profit after tax declined from around 179 million to 146 million euros.
The Food Sector: A Recession-Resistant Shield
While other sectors are feeling the pinch, the food retail industry, being Edeka's core business, remains recession-proof, according to Rosenkranz. "People always have to eat, making it a stable business."
Nevertheless, customers are becoming more price-conscious when purchasing food. Edeka has seen above-average growth in its "Gut & Günstig" private label, which offers more affordable options without compromising quality. However, Rosenkranz notes a reluctance towards buying non-food items given the uncertain economic climate. Many consumers are postponing major purchases. This economic downturn is most apparent in Edeka's self-service warehouse chain, Marktkauf, where 20% of sales come from non-food items, yet even these sales saw a slight decrease.
The Promise of Improved Consumer Confidence by Summer
Despite the current economic uncertainty, Rosenkranz remains hopeful, anticipating a turnaround in consumer sentiment by summer. This improvement depends on what happens with potential trade restrictions, though it's hard to predict at the moment.
Edeka Minden-Hannover is the biggest of the seven Edeka regional companies in Germany, with a distribution area stretching from the Dutch to the Polish border. It includes lower Saxony, where almost half of its more than 76,000 employees reside.
Insights: Trends and Exceptions
- Inflation and Market Pressure: Many retailers face increased cost pressure, but some, like Edeka, still manage to grow and maintain market share.
- Sustainability and Alternatives: Retailers are focusing on offering plant-based and affordable alternatives to traditional products to meet changing consumer demands.
- Private Label Innovation: Private label products give consumers a cost-effective alternative to branded products, leading to above-average growth in the private label segment.
- Convenience and Health Focus: Retailers are prioritizing convenience and health-focused offerings to cater to changing consumer demands, creating varied pricing strategies depending on the product.
- Despite the uncertain economic climate, the food retail industry, being Edeka's core business, remains recession-proof, offering more affordable options through its private label, "Gut & Günstig," without compromising quality.
- In the realm of personal-finance, consumers are becoming more price-conscious when purchasing food, but they are also hesitant to make non-food purchases due to the economic downturn, particularly seen in Edeka's self-service warehouse chain, Marktkauf.
- In the finance sector, retailers face cost pressure, but some, like Edeka, manage to grow and maintain market share by adapting to changing consumer trends, such as offering plant-based alternatives and focusing on sustainability.
