Entering into force in 2019, the Egalim law prohibits French distributors from applying reductions of more than 34% on food products. Since then, we have seen style promotions flourish: the second product at -68%, in an attempt despite everything to convince the consumer that he is getting a good deal and encourage him to buy. But, since the entry into force of this law, the distributors had found other parades to lower the price of the Caddy. Starting with ever more aggressive offers on non-food products. With discounts regularly displaying -80% on the second product or large volume offers at knockdown prices. What rebalance the average price of the basket between food and non-food.
But the bill of deputy Frédéric Descrozaille (Renaissance), currently being debated in the National Assembly, aims to extend certain sections of the Egalim law. And in particular to extend the supervision of promotions to new categories of products, such as hygiene and beauty products.
A proposal that does not pass at all on the side of distributors. Thierry Cotillard, president of the large-scale distribution group Les Mousquetaires (Intermarché, among others), recalls the efforts made by large-scale distribution via the “anti-inflation quarter” operation which led to a 15% drop in margins on hundreds of everyday products and describes as a “scandal” the bill limiting reductions to 35% on drugstores, perfumery and hygiene. For distributors, the text currently being debated is “irresponsible and inflationary”. Especially since it also includes the extension until 2025 of the obligation for distributors to sell their products 10% more expensive than the price at which they bought them from their supplier, with the exception of fruit and vegetables.
If the objective targeted by the deputy Frédéric Descrozaille is to rebalance the balance of power between suppliers and distributors, in fact, this sometimes gets stuck. Thus, fruit and vegetables had not initially been excluded from the obligation to achieve a minimum margin of 10% for large retailers and the Collective “Save the fruits and vegetables of France” welcomed the modification made later to the Egalim 1 law.”Since its adoption in February 2019, the SRP+ 10 (Editor’s note: minimum margin of 10%) applied to fruit and vegetables had demonstrated its completely ineffective and even totally contradictory character with the desired goal. Not only did it not bring any additional remuneration to the producers but ensured the supermarket chains tens of millions of additional euros in margins”, he recalls. To be sure, the fruit and vegetable sector is far from being the exception that proves the rule.