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Supermarkets have the lowest inventories in two years, according to the survey

With demand in free fall due to inflation, supermarket chains have been operating with smaller inventories and trying to balance orders by ordering only a forecast of what the consumer will actually buy.

With this greater selectivity, however, has come an increased arm-wrestle between retailers and industry, which has been more judicious about discounts for large orders.

The markets were right in their predictions. An index of total inventories (goods off the shelves) calculated by supply chain specialist Neogrid fell slightly to 11% in June from 11.5% in May.

This is not an indication of a shortage, but rather an accidental shortage caused by inventory depletion and delayed shipments.

According to Neogrid director Robson Munhoz, the food retailer is operating at its lowest level of inventory in two years. “Retailers no longer buy out of opportunity, but out of necessity. “Several branches of industry have limited volumes, and therefore the discounts provided were more reasonable,” he says.

For him, retailers learn to calculate demand from the consumer’s point of view. “It’s a more accurate essay about what’s actually selling,” he says. “They learn to understand mainly the demand for the use of technology.”

more negotiations

Marcio Milan, institutional vice president of the Brazilian Supermarket Association (Abras), said on Thursday (14) that the organization encouraged members to negotiate more intensively with the industry. The logic is to understand price increases and identify certain unjustified price increases. He says the negotiations took longer, requiring more information, and it didn’t cause a shortage in stores.

“We have not found a shortage of products because of greater negotiations between supermarkets and the industry,” he said. However, eventual supply interruptions can occur in certain ways. “Disruption is a characteristic of the operation of supermarkets. During inflation, there is usually a tendency for it to increase,” he says.

This is because in an effort to improve the purchase price of products, stocks are reduced and some products are missing from the shelves until an agreement is reached with the supplier. As demand heats up less, however, these breaks are less frequent.

Brazilian household consumption rose 0.39% in May compared to the same month in 2021. Compared to the previous month, however, there was a decline of 3.47% due to seasonality. The data comes from the Consumption in Brazilian Homes survey conducted by Abras.

For FGV economics professor Joelson Sampaio, the inflation scenario raises a challenge for industry and retail at the negotiating table. “Retailers need to increase price and product research and comparison so they can improve negotiations. The current moment requires more strategies to get good planning.”

Even with the prospect of an improvement in the fuel crisis, due to the government’s latest move on ICMS, continued disruption in the supply chain should continue to impact retail and industry, he says. “Lack of investment and output in industry makes negotiations difficult,” he says.

What is missing?

The unavailability of extended-release milk on supermarket shelves reached its highest level in a year in June and the second since January 2019. According to Neogrid data, the shortage of goods on the shelves in June was 19.4%. , against 18.8% of the previous month.

Another item that also saw a 19.4% increase in June, the second most of the year, is eggs, which are eventually replacing animal protein on many tables. in May, the index was 17%.

In the case of milk, Munhose says that the high tear should remain until the end of this trimester. Some of the reasons are the drought, rising cattle feed prices and the retail price of milk. “This also affects some derivatives, such as condensed milk, yogurt, cheeses, etc.,” he says.

On the other hand, the egg is subject to another phenomenon: “The rising dollar, the still war situation in Ukraine, high inflation and the increase in electricity tariffs affect the entire supply chain. The industry cannot sustain the price increases and has to pass on some of the costs as supermarkets record very tight margins and are also unable to sustain price adjustments. This affects the end consumer. who starts looking for more offers, cheaper brands, swapping proteins for more affordable ones,” says Munhoz.

Unlike milk, which was at the same level of breakages in the same period last year (19.2% compared to the current 19.4%), eggs are 2.4 percentage points higher compared to June 2021.

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