Like Ronald Koeman with FC Barcelona, commerce faces a period of reconstruction and having to fight against elements that it cannot control. If there has been a central theme in the large consumption congress of Aecoc, closed yesterday, it is the indiscriminate escalation of the prices of energy, raw materials and possible shortages. Costs that are having an impact on the results of companies, which in the case of food are already considering price increases in some products just before the beginning of the Christmas campaign, as reported by ABC.
“The costs are unaffordable”, alerted yesterday Juan Manuel Morales, president of the European employers’ association Eurocommerce and general director of the Ifa Group. The manager warned that there is a real risk of a cascade of business closures, made up of a high percentage of small companies, which could be accentuated if inflation continues its upward trend in the coming months.
Such is the concern that for 66% of the companies that attended the congress, the growth in costs will have a negative effect on the recovery. “The increases in raw materials for energy or transport lead the sector to a truly difficult future,” the president of Aecoc, Ignacio González, recalled yesterday. Although on the other hand, 64% of companies expect in 2022 to match or increase their sales.
The food and beverage association FIAB also expressed its enormous concern at the rise in costs. Specifically, they explained that it poses a serious threat to employment and the recovery of the sector. “The economic situation compromises the competitiveness of companies and jobs at a time when, as the first industrial sector in the country, we want to lead the recovery,” said Mauricio García de Quevedo, CEO. The employers ask the Government for measures to alleviate the short-term effects of the rise in energy while “working on other more structural ones.”
Apart from its impact on employment and the income statement, companies’ investments would also be depleted with this rise in costs. “In the coming years, businesses have to double their investment, up to 4% on sales, to face the digital transformation and sustainability,” said Juan Manuel Morales in his speech. In this sense, FIAB explains that “current conditions could discourage investment in new projects.”
Less shopping and more value
If food distribution already poses upward revisions to product prices despite the need to reactivate consumption that is still far from pre-pandemic levels, non-food companies do not expect increases yet. Yes, it could be carried out in those products that have more innovation. As Mediamarkt, Beko, Leroy Merlin and Samsung explained yesterday, they expect fewer purchases in the Christmas months, “but they will be of more value,” commented Samsung’s B2C sales director, Daniel Molero.
“There is an increase in cost raw materials but it cannot be directly transferred to the price,” stressed Beko’s marketing director in Iberia, Manuel Royo. To do this, the appliance company points out that they are working on optimization processes so that costs affect as little as possible. Mediamarkt’s commercial director, Samuel Gutiérrez, also agreed: “Although we have to juggle, this end of the year we cannot afford to transfer increases to the product, he said.
For the Christmas period, the Mediamarkt manager does not expect major ‘stock’ problems, although he does believe that a specific product may be missing, especially in terms of technology, such as mobile phones or video game consoles. The excess demand for chips is one of the causes of this problem, since innovation is causing, according to Samuel Gutiérrez, that there are “many products that previously did not have technology and now do.”
George is Digismak’s reported cum editor with 13 years of experience in Journalism