Heading for a 30% price increase? What can change in retail

All brands are afraid of price increases (© Illustrations/Nicolas Zaugra/ Lorraine News)

Will the price explode in the coming weeks? It was in all fear of the grand distribution, which, in an unprecedented fashion, rose unanimously against the bill of deputy (Renaissance, majority) Frédéric Descrozailles, debated this Monday 16 January 2023 in the National Assembly.

It plans to change the rules during the annual negotiations between suppliers (manufacturers, manufacturers, etc.) and brands (purchasing centers, supermarkets, etc.) on consumer products.

What’s the rule today?

Annually until 1uh March, as governed by French law, these two players are involved in negotiating the price of food products. Today, if no agreement is reached between the two parties, last year’s price is applied.

The balance of power therefore rests in the distributor’s favor, since the supplier is obligated to deliver the product, even if the cost is too high.

What will change the bill?

Members want to reverse this balance of power. Why ? Avoid weakening small industry players who are heavily affected by rising production costs associated with soaring energy and raw material prices.

In his very brief draft law, he plans to amend article L441-3 of the Criminal Code, by adding the following:uh March, every order placed by the distributor is made based on the price list and the general terms of sale that apply. »

In other words, if there is a disagreement, the contract is terminated, the supplier is no longer obligated to deliver, and negotiations must continue.

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Why is the mass distribution downwind?

However, even if MPs deny it, the signs are Auchan, Carrefour, Casino group (Casino, Monoprix, Franprix), Cora, E.Leclerc, Intermarche, Lidl, Netto, and System U, confirmed in a joint press release that this action would allow large suppliers to unilaterally impose their tariffs distributors, negating the notion of “commercial negotiations”.

These very large suppliers offer important brand names, which distributors must offer to attract consumers to their stores. Tanda will be forced to accept the prices charged by these multinational companies, including with increases of more than 30%.

Joint press releases from major retailers

About what completely reversed the balance of power.

Are we going to see a price increase?

The consequences of this action? The “inevitable increase in price”, pointed out the representatives of the sector, starting with Michel Edouard Leclerc, president of the eponymous brand, which generated “a further increase of 10 to 30%”.

The impact of this bill on retail SMEs can also be considered, according to Léonard Prunier, president of the Fédération des entreprises et entrepreneur de France (suppliers of food and non-food retail), who announced the risk of “prices rising from 40 to 50%”.

What did the manufacturers say?

Industrialists, backed by agricultural unions, denounced “widespread fake news”, in the voice of Ilec (Consumer company liaison agency, which brings together 90 companies that produce and market consumer products) . They ensured that the text would make it possible to secure all actors, including distributors.

They recall “that manufacturers have been reducing their margins for years to protect consumers’ purchasing power”.

Is the government on his side?

This bill, although proposed by majority members, did not receive support from the government. Minister of Commerce delegate Olivia Grégoire, requested byAFP, acknowledged the “inflation risk”. A point shared by the Minister of Economy, Bruno Le Maire, who called on Monday to change the text, in an interview with BFM TV.

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