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“Inflation leads people to make trade-offs”

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Dominique Schelcher, CEO of System U, in Rungis (Val-de-Marne), March 9, 2022. SYLVIE HUMBERT / REA

Rising prices, purchasing power… Dominique Schelcher, CEO of the large-scale distribution group Système U, is already registering “the first signs of a decline in sales” in stores. In an interview at World, he explains that the French buy less and go to the essentials, and warns of the impact of soaring energy prices or drought on agricultural yields.

In what state of mind do you approach this last part of the year?

In very great uncertainty, even if, this summer, food consumption held up overall. The French have gone on vacation. Many chose accommodations, such as camping or lodging, which led them to our food stores because they had to cook. It is now that we are beginning to see the first signs of a decline in volume sales. These are certainly still weak signals, but they can mark the beginning of a trend reversal. Inflation, which reached 6.1% in July, according to INSEE, is starting to lead people to make trade-offs.

What scenario do you fear?

The question is: how far will these trade-offs go? In stores, people told us that they needed to change their minds so badly that they had put some money aside for the holidays and have fun, and that they’ll see for themselves when the new school year begins. What will be the proportion of people in difficulty after having paid the holidays and the start of the school year, which is, in general, a large budget? This is the great unknown. Especially since the peak of inflation has not been reached.

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The government asked us to negotiate throughout the year with suppliers. We started doing this on March 1 and continued through the summer. We already know that price increases are still to come. But where inflation will be in the coming months, between 6% and 9%, I cannot say. Sales volumes could then decrease further, because people who are constrained in their budget buy less and go to the essentials. Some customers, for example, no longer buy fabric softener and stain remover, but only detergent.

The annual rate negotiation period will begin in the fall. Does this still make sense today?

Not really, since we have already negotiated throughout the year. With some suppliers, we are on the fourth rate increase this year. This is unheard of. In the discussions around the Egalim law [votée en 2018, et destinée à répartir plus équitablement la valeur au sein de la chaîne alimentaire et à mieux rémunérer les agriculteurs]it was thought that one of the ways to change things was to change the date that annually closes price negotiations between distributors and suppliers, currently set for the end of February.

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Source: www.lemonde.fr

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