Navigating Economic Downturn: The Impact of Inflation and Declining Consumer Power on the Retail Industry at LATAM Event

At the Retail Day LATAM event held in Buenos Aires, industry experts discussed the impact of the government’s measures on consumer purchasing power. Food supply companies, supermarkets and market analysts gathered to discuss the challenges facing the industry. One concerning statistic revealed was a 15% decline in sales volume at large chains in April compared to the previous year, reflecting a general downturn in consumption.

The trend of offering more products at lower prices is becoming more common in response to economic challenges. Brands with lower prices are gaining market share, while consumers are gravitating towards cheaper options or smaller quantities of leading brands. Some product categories are being sacrificed as consumers prioritize essential purchases. Javier González from Nielsen IQ reported that sales in large chains have seen an average decline of 18% in the first three months of the year, with consumers being more selective in their purchases and reducing discretionary spending.

According to Osvaldo del Rio, president of consulting firm Scentia, this decline is due to a 13-14% drop in income in the first quarter and projections for the rest of the year do not look promising, with estimates suggesting a 9% year-on-year decrease in mass consumption. Inflation though slowing down still exerts pressure on prices and wages making recovery difficult for consumers. The retail industry is facing significant challenges as consumer behavior adapts to changing economic conditions and companies are implementing strategies to address declining purchasing power and changing preferences to navigate this uncertain business environment.