Crisis Undercuts Greek Supermarkets

A lingering economic crisis coupled with capital controls has cut deep into Greek supermarket sales and some are going out of business.

The sector, which along with other businesses has been hammered by a 5 1/2-year long crisis and austerity measures that kept Greeks from spending, was just beginning to recover before the Radical Left SYRIZA took over in January, repeating its victory in Sept. 20 snap elections.

The decline in demand, combined with the capital controls, which have strained relations between retailers and suppliers, has already had an impact on the sector, with a number of stores on the brink of shutting down, layoffs threatened and a further concentration on the horizon, Kathimerini said.

According to data from market researchers IRI, supermarket turnover in the first eight months of the year posted a drop of 1.9 percent from the same period in 2014.

A year earlier the market had stabilized (showing a marginal 0.1 percent decline from the January-August 2013 period), with the prospects for a return to growth leading all major players to significant investments, such as opening new stores and acquisitions.

The decline in turnover is mainly a result of shrinking demand and not a drop in prices. The IRI figures show that sales volume fell 1.1 percent while prices per volume unit decreased 0.8 percent on a yearly basis. In total, the value of sales fell 1.8 percent in 2014, but this was primarily due to the 2.6 percent price drop per volume unit.

August was the second-worst month for supermarkets this year, posting a 4 percent annual decline. That came after banks shut down for 23 days in July and fears the government would confiscate bank accounts, leading Greeks to hoard on goods.

The sector had just before that shown a remarkable rise of 37.6 percent in the week from June 28-July 4 just before a July 5 referendum on whether Greece should resist creditor demands for more austerity as Prime Minister Alexis Tsipras asked for support.

He got it and then promptly reneged on his word, then closed banks, setting off a sharp decline in a number of businesses.

In the weeks that followed the July referendum as well as the first couple of weeks in August there was a considerable decline in sales, ranging from 0.5 to 10.8 percent, depending on category.