Intermarché discounts cause turmoil

Intermarché has caused quite some turmoil in France with its 70 % discounts on some major brands: shoppers started fights, manufacturers distanced themselves and the government launched an investigation.

Loss-leading

There were several fights in Intermarché supermarkets last week because of an enormous discount on Nutella, which cost a mere 1.41 euro instead of 4.7 euro for a 950 gram jar. It is not the first and only time the store chain has given such huge discounts: it had a 70 % discount on Perrier for one week and it will follow those with Pampers Baby-Dry and Carte Noire coffee in the next few weeks. These are all part of the “four cheapest weeks in France” period.

This has generated a lot of media attention and has put its price image front and center, but it has also opened a debate, willingly or unwillingly. There is no way that a 70 % discount does not lead to a loss-leading sale, which is not allowed in France (nor in Belgium). The only exception are seasonal sales, but it is not like Nutella is a seasonal product …  

Value destruction

Manufacturer Ferrero immediately distanced itself from the discount: “This was a unilateral decision made by the chain. We regret the discount and its consequences”, the company said. The federation of food manufacturers ANIA is also unhappy about the situation.

The discount’s timing is rather unfortunate, considering the French government has just decided to deal with price wars and to limit price discounts to no more than 34 % of the purchase price. Minister of Agriculture, Stéphane Travert, has already expressed his indignation and talks about value destruction. The DGCCRF, which is the agency concerned with consumption, competition and fraud, will investigate the matter and consumer organization CLCV is warning shoppers of deceitful discounts. In short, it is a hot topic now more than ever…

For the sake of clarity: there is no discount in Belgian Intermarché stores, for now.