From tap beer sold as "three for 6 RON plus one free" at themarket to cars worth tens of thousand of euros with discounts sohigh that practically one can buy another car, almost nothing isselling without a discount in retail any more. With a new strongwave of purchasing power decline as a result of the overall salaryand pension cuts affecting almost 8 million people, i.e. the 2million employees of the public sector and state-owned companiesand the 6 million pensioners, retailers will have to resort tobrutal discounts to be able to survive in 2010.
Gunter Grieb, chief executive of discount store chain Profi, theannual business of which stands at 140 million euros, says tradechains are those artificially amplifying the promotional offerphenomenon.
"Consumers demand lower prices, indeed, but it is retailers thatpush the issue with very aggressive promotional offers for theproducts in their catalogues, so that the regular price is nolonger attractive compared to that of the sale. I believe suchdesperate actions of big store chains are not taking the market inthe right direction, because price cuts for products part ofspecial offers translate into higher mark-ups for the products inlower demand on the market. The right thing to do would be for allretailers to come up with good prices for the entire range ofproducts," Grieb says.
Another retail manager confirms the onset of the promotionaloffer war: "Had we had these promotional prices in 2008, peoplewould have rushed to the stores, but now we can feel the purchasingpower is lower. Discounts have a weak impact on durables, forinstance, because people are no longer taking out loans," said themanager who wished to remain anonymous.
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