Is mass distribution, as it repeats throughout advertising campaigns, the best ally of the purchasing power of the French? In this return to school marked by inflation, “Complément d’Enquête” reveals the less than rosy underside of our hypermarkets – in particular behind the scenes of their negotiations with brands and manufacturers. For the magazine, a representative of an international agri-food brand (which we will call Arthur) reveals how brands charge their suppliers for each square meter of their stores.
“To be present on the prospectuses, we pay”
It starts at the entrance, with the catalogues. “What there is to know, explains Arthur, it is that to be present on the leaflets of the large distribution, we pay. Distributed in millions of copies, these leaflets are, for a brand, the guarantee of volume. Signs therefore monetize the location very expensive. Arthur’s company appears in 500 prospectuses each year, at the rate of 200,000 euros per publication: a budget of 100 million euros per year, all brands combined.
But there is no shortage of other opportunities to take out the checkbook… Thus, radio advertisements broadcast in stores. “In negotiations, sometimes they demand that you buy some”, says our informant. His company would spend 5 to 10 million euros a year on radio spots.
“The supplier finances 100% of the promotions”
But the heaviest bill for suppliers is on-shelf promotions. Whether they show -40% or -70%, most of the time, it’s not the hypermarket that pays, says Arthur: “Brands promote throughout the year. They require their suppliers to offer them regular promotions on their brands, and they require them to be the ones who finance them, which can lead the consumer to believe that they are the ones who pay them. However, it is the supplier who finances 100% of the promotions.”
These practices are not illegal, and are mentioned in commercial contracts. It is also in this way, by agreeing to finance the next promotions of his brand, that Arthur was able to obtain a price increase this year.
Extract from “Inflation: the low blows of the hypermarkets”, a document to be seen in “Complementary investigation” on September 1, 2022.
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