Supermarkets breaking turnover records due to price increases: study

Supermarkets broke turnover record after turnover record last year, according to market researchers NielsenIQ, who attributes this to the more expensive groceries. The total turnover for 2023 exceeded 50 billion euros for the first time. Income during Christmas and Easter has also never been this high in the Netherlands. Yet fewer items went through the cash registers.

Average prices in the supermarket were almost 10 percent higher in December than in the same month in 2022. Tobacco, sugar, and sweets, in particular, became more expensive, said NielsenIQ. But that was offset by an overall decline in sales volume of almost 3 percent.

Last year, as a whole, turnover was almost 8 percent higher at 59.1 billion euros. The researchers point to increased energy prices and raw material costs as the main causes. Supermarkets had to increase their prices considerably.

The downside is that consumers have started to pay extra attention to their expenses due to more expensive groceries. NieslenIQ also noticed that people turn to home brands relatively more often.

Jumbo, the second-largest supermarket chain in the country, recently reported that its profits are under increasing pressure. “In addition to an increase in purchasing prices, which were often not passed on to customers one-to-one, Jumbo had to deal with significantly higher costs,” CEO Ton van Veen said earlier this month.

He also said that Jumbo lost some market share last year. Jumbo wants to regain lost market share this year by introducing price reductions for many products.

Figures from NielsenIQ show that Jumbo’s market share has fallen from 21.4 to 21.1 percent despite the chain adding eleven branches. Major rival Albert Heijn increased its store base by almost 40 locations and saw its market share rise from 36.7 to 37.1 percent. The market share of Lidl, number three on the list, remained stable at 10.6 percent.

According to NielsenIQ, the sector’s turnover may take a significant hit in 2024. The ban on the sale of tobacco in supermarkets as of July 1 will result in a substantial loss of turnover. In the last six months of last year, sales of tobacco-related products amounted to 1.4 billion euros, the researchers calculated.

In addition, supermarkets can remove tobacco from the shelves earlier than legally required. Albert Heijn has already done so as of this year. “That will result in even more turnover flowing away from the supermarket,” said NielsenIQ.