Passing price hikes on to the customer
Self service areas are now in a lot of grocery stores, lowering the cost of labour. mbl.is/Kristinn Magnússon
Breki Karlsson, chairman of the Consumer Association of Iceland, says that price hikes cannot be passed on to consumers all the time. It is possible to argue about who will bear the cost of massive price hikes, but there is no evidence that grocery stores have been burdened with these increases in terms of margins.
Iceland was in the 3rd seat when it came to highest food and beverage prices in Europe in 2021 and the margin rate in the daily market was higher than the average for Western European companies. This is reflected in the Competition Commission’s report on the development of margins from 2017 to 2022.
Breki Karlsson, the chairman of the Consumer Association of Iceland. Photo/Consumer Association of Iceland
“We have long pointed out that suppliers and grocery stores must bear this burden, and not pass it on to consumers all the time. Suppliers and grocery stores can argue endlessly about who should bear this burden, but it is clear that they must at least bear some of the increases that are now in the cards.
As it is, price increases are simply reflected in higher prices, and no attempt is made to share this burden with the customer. Already, food prices have risen by 20% in the last year and have become a significant burden for households,” says Karlsson.
Self-service areas and lower labour cost
Asked if grocery stores have had the capacity to take on some of the burden of high prices, Karlsson says that he thinks so and points to the self-service areas and less money going to wages.
“It must be, and one would assume that there is significant capacity to shoulder this burden with the customer. That is exactly what these technological solutions are supposed to do, making things both simpler and cheaper,” says Karlsson.
