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EU markets launch “price shields” to protect inflation-weary shoppers — while US buyers get shrinkflation

Thursday, May 5, 2022 by Robinhood Snacks |

A pasta promise… European shoppers are getting help in the grocery aisle. Consumer price increases in Europe hit another record last month as Russia’s war on Ukraine dragged on, straining price-sensitive shoppers. So Leclerc, France’s largest supermarket chain, plans to put popular products under a “price shield” to make them more affordable. UK markets also lowered prices of essentials, and others across the EU are considering cuts.

  • How the shield works: Leclerc will freeze prices of 120 top products through July. The desired result: predictable ketchup, coffee, and pasta prices.
  • A pricey plan: Leclerc may pay more to stock its shelves, since suppliers like Unilever plan to keep hiking prices to offset rising costs (think: wheat and corn). But Lecelerc hopes the shield stops shoppers from fleeing to rival supermarkets.

The shields haven’t made it across the pond… Instead, we get #shrinkflation. Food prices are spiking even more sharply in the US, but supermarkets haven’t done much to keep them in check. Instead, food producers have found ways to mask rising prices with creative ’flation: Frito Lay took a few chips from each bag of Doritos, Mondelez rebranded Oreos as “limited edition,” and Pepsi shrank its Gatorade bottles.

THE TAKEAWAY

Price guarantees build customer loyalty… but they’re also expensive. US retailers like Walmart, Best Buy, and Target use price-match guarantees to keep shoppers coming back. Yet persistent inflation is making that harder, forcing McDonald’s, KFC, and Burger King to downsize their dollar menus as their own costs rise. Even if Leclerc’s price shield keeps shoppers coming back for a while, it’ll be hard to keep up in the long run.