Growth rate of trade in current consumer goods dips below zero

Heavy price competition hitting stores

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The tightened price competition among the Finnish food retailers ate into the value of sales through stores selling daily consumer goods during the first months of the year. Consequently, the retailers believe that the sales growth for the entire year will remain negative.
      According to Guy Wires of the Federation of Finnish Commerce and Trade (FFCT), this is the first time in over 20 years that sales have dropped that low. Even the sales of the huge hypermarkets fell by an unprecedented 0.7%. Only the sales of small convenience store-type outlets increased.
     
"The decrease in sales is a result of the extremely tight price competition as well as of the rapid increase in the number of food retailers' own-brand items. On the other hand, the sales volumes of the food retailers have increased", said Wires while presenting the figures in Helsinki on Wednesday.
      The figures do not include the German discount chain Lidl, owing to the fact that its sales figures are not made public. However, based on Lidl's almost 100 outlets and about 2,000 employees in Finland, their sales growth could be estimated at being around 4%.
      The tight price competition in current consumer goods has been slowing down the overall development of retail sales for the last couple of years. As the prices have come down, the total value of sales has decreased. A similar trend can be seen even in the sales of department stores, over half of these being trade in foodstuffs and grocery assortment items. In areas other than these products, the department stores' trade showed an increase of over 4%.
     
The low sales figures in the sector also clearly depress the sales for the entire retail trade. Consequently, the average overall growth rate, excluding motor vehicles, was just 0.3% over the period from January to April, or around 1.5%-points down on the previous year.
      Last year, the FFCT members' total sales, exclusive of motor vehicles, amounted to more than EUR 20 billion. Retail trade in current consumer goods represented EUR 8.7 billion of the total amount. The share of motor vehicle sales was somewhat larger.
      The 11.3% drop in alcohol sales by value contributed to the decrease of the overall average volume of trade during the first months of the year. This is not to say booze sales fell by volume, however: the drop was primarily the result of last year's average 33% cut in alcohol taxes.
      Excluding the trade in groceries and alcoholic beverages, the average growth in trade was about 3% over the first months of the year. Moreover, the growth rate in the construction and interior decoration goods trade developed favourably. The most prosperous trade was home electronics, owing to the buoyant demand for digital television receivers and digital cameras.


Links:
  Federation of Finnish Commerce and Trade

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