According to preliminary estimates by Istat, in October the national consumer price index for the entire community (NIC), gross of tobacco, recorded an increase of 3,5% on a monthly basis and of 11,9 .10,9% year over year. In the same month, the prices of food, home and personal care products went from +12,7% to +8,4%, and those of frequently purchased products from +8,9% to + 11,4%. Finally, the prices of foodstuffs rose from +13,1% to +XNUMX%. These are percentages that have not been seen in our country for forty years and which are putting a strain on companies and families grappling with soaring inflation and an energy crisis that has increased the cost of bills.
What is the impact of this reality on household consumption? And about businesses? We talked about it with Piero Canova, general manager of Unicoop Tirreno, one of the seven large Italian consumer cooperatives which, under the Coop brand, is present with 96 points of sale in Tuscany, Lazio and Umbria.
Director Canova, Unicoop Tirreno presented a plan to reduce consumption to face the increase in prices and defend the purchasing power of consumers. What actions have you envisaged to deal with the current crisis?
«The increase in energy costs for businesses and families is becoming a serious difficulty. We therefore asked ourselves whether virtuous behaviors could help contain this inflationary spiral that is becoming increasingly burdensome for consumers and we implemented them. We have envisaged a series of measures such as adjusting the internal temperature, reducing the operating hours of air conditioning systems, switching off signs and unnecessary equipment after the stores are closed, dimming the lights at certain times of the day, the closure of the entrance doors of the stores to avoid heat loss, the interruption of the air recycling during the night, the efficiency of the use of cold rooms and refrigerated counters, as well as of the appliances supplied ».
In your estimates, what effects will these actions produce in terms of reducing consumption?
«These are measures that will help us reduce consumption by 5%. To this percentage we must then add a further reduction of 1,5% deriving from our investments in photovoltaics. We are installing photovoltaic systems on roofs and in parking lots, despite the bureaucracy not helping us. Do you think that in the past the technical times for authorizations were 60/90 days, today we have exceeded 12 months. In an emergency situation where every kilowatt of electricity that Italy manages to put into the grid is one kilowatt less of energy that it has to buy at a high price, the bureaucracy should lend us a hand and not slow us down. But we go ahead and try to do everything possible ».
We are all dealing with the effects of high energy prices and inflation. Are these two phenomena having an impact on consumer spending?
«In 2022, the average price increase is around 13%. At the moment, shopping has an extremely important increase in costs for consumers. On our network we have noticed a tendency to reduce the size of the single receipt, which is losing value. Consumers no longer buy products to put them in the pantry, but only buy what is strictly necessary, avoiding waste as much as possible».
And on your turnover, what is the impact?
“In the short term, the equation appears to be holding. You sell fewer things, but since the prices are higher, you end up staying on the same level. I'll give you a practical example: Mr. Mario spent 20 euros on his groceries last year and he's spending the same amount again this year. However, the difference is that with those 20 euros he buys fewer products than a year ago, but our turnover remains the same. However, we do not know if this equation will continue to hold. If bills go up further in the winter due to the cold we could start to see a contraction in demand. To date we cannot know, but what is certain is that if it happens, without political intervention by the Government, the situation could become even more difficult".
What support policies would you need?
«Next year the financial statements of all the operators will not show great profits, but as a commercial activity you cannot even work at a loss. The scale of the increases we are experiencing is above the profitability and earnings any chain can generate. In 2017, we were spending 16 million euros on electricity a year. Thanks to our virtuous behaviour, we have dropped to 9. This year, with the same consumption, they could become 27 or 35 million. Large-scale distribution has not been considered by previous governments as an energy-intensive industrial sector, so we have not had the aid and incentives that other sectors have received. It is clear that support measures could help us because they would reduce the impact of the cost of energy and the increases we receive from producers. Let me give you an example: this year a leading producer of dairy products presented us with 5 price lists, each with price increases. Overall, the increases exceed 30%. Given our corporate name as a cooperative, we have less pressure than others to generate profits, but in the face of a wave of this type, the levers we have at our disposal are few. We are trying in every way to prevent these increases from falling on consumers, but the fact remains that if the price of a jar of yogurt has risen for us from 40 to 65 cents, it is difficult not to ask customers for a raise in turn. If the Government decides to mitigate or cancel VAT on certain indispensable product categories, this could be an action that would benefit a large portion of the population».
In 2020 and 2021, during the toughest period of the pandemic, large-scale distribution was one of the few sectors to generate profits. Couldn't you reinvest them to contain the price increase?
«It's an observation that may make sense, but I'm talking to you about our budgets. Our turnover is about 850 million. In 2020 we had a profit of around 1 million euros, in 2021 we almost reached two million. I gladly invest them to make our customers spend less, but unfortunately the impact is really minimal to deal with the increase in prices we suffer. It's like putting your finger in the hole of the dam while the dam is collapsing. We are talking about a problem that exceeds the interests of individual companies and which does not only concern the costs of bills. Interest rates have risen and loans are more expensive, the price of raw materials such as flour has risen, fuel costs have risen and so on. It is the entire mechanism that is working against the economy of companies of all sectors. But you don't have to feel sorry for yourself. We are all called to find the best balance and we are trying».
How?
«We focus our actions on a few but indispensable products: pasta, milk, biscuits. We sell at a loss, but we try to ensure our customers get fair prices on necessary products that help them get ahead. We have a social purpose and we intend to pursue it by doing everything in our power. This is why we changed our policy and decided to focus on our branded products. It is on those that we can apply the greatest discounts because we have a little more control over the supply chain and are able to bear the intermediate costs. They are quality products that are sustainable from an environmental and social point of view, and at fair, just prices, both for those who produce them and for those who buy them».
