With lower demand, supermarkets reduce inventories, and there are fewer eggs and milk on the shelves – Economy

With demand in free fall due to inflationthe networks of supermarkets have worked with smaller inventories and sought to balance orders, by ordering only the forecast of what the consumer will actually buy. With this greater selectivity, however, the arm wrestling between shopkeepers and industrywhich has been more judicious in its discounts for large orders.

The markets have been right in their predictions. The general stockout index (products that are missing from the shelves) calculated by the neogrid, a company specializing in supply chains, had a slight drop in June and was 11%, compared to 11.5% in May. This is not an indicator of shortages, but of occasional shortages, which occur due to lower inventories and delayed deliveries.

“The month’s break reflects a set of factors: the increase in prices; the retail buying less and lower inventories; the consumer with less purchasing power; purchases in smaller quantities and the search for essential items, with the customer removing indulgent items from the cart (those with which the buyer presents himself)”, says Robson Munhoz, director of Neogrid. That is, with the consumer buying less, even if the stocks decrease, there are not so many products on the shelf.

According to Munhoz, food retail has been working with the lowest level of inventories in two years. “Retailers are no longer buying out of opportunity, but out of necessity. Several industries have limited volumes and, therefore, the discounts granted have been more judicious”, he says.

For him, retailers are learning to calculate demand from the consumer’s point of view. “It’s a more accurate essay on what actually sells”, he says. “They’re learning to understand the demand, mainly through the use of technology.”

more negotiations

The institutional vice president of Brazilian Association of Supermarkets (Abras), Marcio Milan, said on Thursday, 14th, that the entity has encouraged members to negotiate more intensively with the industry. The logic is to understand price increases and identify certain unjustifiable increases. He says that negotiations have been longer, demanding more information and that this has not caused shortages in stores.

“We did not identify a lack of products due to the greater negotiation between supermarkets and the industry,” he said. Even so, eventual interruptions in supply can happen in specific ways. “Rupture is something inherent to the operation of supermarkets. In times of inflation, there is usually a tendency for this to increase”, she says.

This is because, in an attempt to improve the purchase price of the merchandise, inventories decrease and certain items are missing from the shelves until an agreement is reached with the supplier. As demand is less heated, however, these breaks are less frequent. Consumption in Brazilian homes rose 0.39% in May compared to the same month in 2021. In comparison with the immediately previous month, however, there was a drop of 3.47%, influenced by seasonality. The data are from the research Consumption in Brazilian Homes by Abras.

For Joelson Sampaio, professor of economics at FGV, the inflation scenario raises the challenge for industry and retail at the negotiating table. “Retailers have to increase research and comparison of prices and products to be able to improve negotiations. The current moment demands more strategies to obtain a good planning.”

Even with the prospect of an improvement in the fueldue to the recent government measure involving the ICMS, the continuity of the rupture in the production chain should continue to have an impact on retail and industry, he says. “The lack of inputs and products in the industry ends up making negotiations difficult”, he says.

What is missing

The unavailability of milk long life on supermarket shelves in June reached the highest level in a year, and the second highest since January 2019. According to data from Neogrid, the lack of the item on the shelves registered a rate of 19.4% in June, compared to 18 .8% in the previous month. Another product that also registered a high of rupture in June, of 19.4% – the second highest in the year -, were the eggs of poultry, which end up replacing animal protein on many tables. In May, the index was 17%.

In the case of milk, Munhoz says that the high rupture should remain until the end of this quarter. Among the reasons are drought, increase in the cost of cattle feed and the value of milk at retail. “This also affects part of the derivatives, such as condensed milk, yogurt, cheeses, among others”, he says.

The eggs, on the other hand, obey another phenomenon: “The dollar increasing, the situation is still war in ukrainehigh inflation and rising tariffs light affect the entire supply chain. The industry cannot sustain increases and needs to pass on part of the cost – with supermarkets registering very tight margins and also failing to hold the readjustment of values. This affects the final consumer – who starts to look for more offers, cheaper brands, exchanges proteins for the most affordable”, says Munhoz.

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