Who gains from freezing prices for products in Russia?
Russian retail chains freeze prices for “vital products”, but this measure may be referred to as frivolous if to take into consideration current economic climate and situation in agribusiness.
In February 2015 Russian Retail Companies Association (ACORT), food retail chains, reached a decision to freeze prices for more than 20 “vital products” for two months. It was decided that each retailer will form the list by itself basing on Russian Government Decree dated 15 July 2010 №530.
According to ACORT information, today the initiative was endorsed by such companies as Magnit, X5 Retail Group, Auchan, Dixi, Metro Cash & Carry, Lenta, O’key, Globus, Billa, Selgros, Vester, online grocery retailer Utkonos and Atak. Federal Antimonopoly Service (FAS) has also endorsed the initiative. The retailers consider price freezing as a possibility to support Russian consumers in difficult economic environment and to keep the level of sales.
Products suppliers are not so optimistic about the retailers’ initiative. Eldar Beglov from Group of Companies Losevo believes that this attempt of prices regulation will not change the situation fundamentally. Under a double digit inflation in the country food prices cannot be fixed. It is necessary to try to turn around the economic situation in the country, not to struggle with prices, added the expert.
VEMA (The East European Milk Alliance) Executive Director Vasily Redin considers the retailers’ initiative to freeze food prices to be a good PR-campaign, which creates a good image under worsening situation in consumption. One of the best ways of prices stabilization and consumption increase could be retailers’ decision to lower the trade margins and make them more transparent and clear. This is according to his words.
