The PRICE WAR is a term that stands a cycle of consecutive price reductions for goods or services, with the aim of ousting competitors from the market.
Finnish people have now the ground to expect for the price competition among retail food stores to intensify.
In the spring the corona crisis started with the intensive buying up of food, toilet paper and other groceries. Even after this trend, the lives of Finns revolved even more strongly around the home.
In the S Group's semi-annual report published on Friday, SOK's Chairman Taavi Heikkilä said that the chain has reported an increase in the grocery trade at about 10% for each month.
The discourse over the price of food got the new rounds last week when Lidl announced it would lower the price of 300 products permanently and compromise on discounts on margins (decrease in margin). Between the lines, the chain declared a price war with its competitors.
The “cheapening” of the prices in S Group was one of the well-known advertising campaigns in recent years. S Group has announced that it shelving the campaign.
- Even if we do not use the cheap pricing as an active tool, it does not mean that we are not as strict, competitive and aggressive in pricing. If competitors change their own prices, we will react immediately, Taavi Heikkilä says.
However, according to the S Group, price competition is not enough to boost citizens' purchasing power, but it demands for the tax solutions that facilitate consumption. According to estimates by the Ministry of Finance, private consumption will decrease by 3.5 % this year and the number of employed will fall during current and next year.
Especially for the vigorous revival of the tourism and restaurant sector the S Group would need help from the State. Taavi Heikkilä and Harri Ojanperä, the Director of the tourism and restaurant industry, would consider a two-year reduction in VAT on foodstuffs as one of the possibilities. Leaders suggest that the decline could be from the current 14 % to 5-10 %.
The buying up of masks has surprised
When the number of coronavirus cases turned to a new rise at the turn of July-August 2020 and the discussion on mask-wearing recommendation began, Finns also rushed for masks. In many shops, the shelves eventually gaped in emptiness, even though it was initially estimated that there would be enough masks for everyone.
- Although we had assumed that the mask trade would rise, once again found itself in a situation where we had to sell instantly, admits Arttu Laine, the S Group's Executive Vice President.
According to Arttu Laine, the reason was that when demand was expected to double or triple from the beginning of the week, but eventually it increased tenfold.
However, the mask deliveries have not stopped, and Laine assures that replenishments will be received quickly. The most important message is that there is no reason to buy up, but the new goods are coming all the time.
The full information and the source text can be found at Ilta-Sanomat website.
Published 09.08.2020, FINREPO