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Julian Manduca
EU membership pushed down the prices of some foodstuffs particularly pasta and wine, but free trade with our northern neighbours has kicked off a price war among supermarkets.
While the war will bring smiles to all consumers, grocers may not welcome the news as they may find the competition stiff because of economies of scale. As was reported in MaltaToday’s sister paper The Malta Financial and Business Times in March of this year, a new supermarket chain has taken full advantage of the new business environment to import its own branded products.
A group of eight other supermarkets have since ganged up and are considering doing the same.
The news kid on the block is SISA the Italian supermarket giant and in Malta two branches have been opened in Sliema and St Julian’s, while a third is expected in Tarxien in August.
SISA sells its own branded products, although usually not more than 6 percent of its shelves carry SISA labels.
Last week the supermarket distributed an 8-page full colour leaflet which included offers on about 50 products, 13 of which carried the SISA brand name.
Among the best offers were 250 Lion Tea bags selling at Lm1.28 - down from Lm1.94 and 200g Nescafe jars at Lm1.19 – down from Lm1.60. The offers also included 10 baskets of strawberries at Lm1 and Watermelon at 20c per kilo.
The reaction of the competing supermarkets was strong and immediate. A larger four page full colour brochure offering the same prices for Nescafe and Lion Brand tea.
Those prices are lower than cost and it is unclear whether such low cost prices are legally acceptable.
The competing supermarkets, Tower, Shopwise, Shoppers, Trolees, Park Towers of Fgura and St Julians, Lasco, and Carters also offer about 50 products at substantially lower prices and beat SISA on its two front page products. The competitors are offering pasta, selling at 18c per 500g, watermelon at 15c per kilo and olive oil while matching other SISA prices.
The rush on some products caused them to run out and the cheap Nescafe was completely sold out and even the importers could not replenish the stocks.
While MaltaToday was told by some supermarkets that the importers of Nescafe were refusing to supply SISA with the 200g jars, this paper is informed that there was no truth in the allegation and the importer simply was not in a position to supply.
When asked whether SISA was considering further expansion, its managing director Simon Mifsud said: “It is not a question of having a maximum or a minimum number of supermarkets. It is a business feasibility issue.
“Hand in hand with the taking over of a supermarket are the investments
required firstly to bring it up to SISA franchise levels and secondly in ensuring the pleasant shopping experience of our clients.
“SISA Malta Ltd has taken over three supermarkets within the first three months of operation and we have successfully refurbished the Sliema and St Julians outlets already, which of course involves a substantial investment.
“We have finalised plans for the third supermarket in Tarxien over the last few days where works are due to be commenced in the month of July and completed during August. A further investment is made in the employment and training of staff which has already reached over fifty.”
Asked if SISA was importing fruit from abroad, given the low prices, Mifsud replied: “SISA Malta Limited is not importing any fruit for abroad. SISA Malta Ltd is importing only its own branded products and other products which are not available locally through the importing network. SISA has a range of more then 500 branded products ranging from pasta to nappies, and from wines to oils.”
Mifsud is expecting the share of supermarket business to grow and told MaltaToday: “SISA Malta Ltd has studied the development of the supermarket sector overseas and has noted that in most developed countries the percentage of sales through supermarkets is vastly greater then the Maltese scenario.
“As such we expect that supermarkets will grow in importance and SISA intends to be at the forefront of such growth always by ensuring that its clients and customers are obtaining an excellent service at competitive prices.”
The SISA offers are nearly over as the offer was from 17 June to 1 July, while the competitors offers will be running to 10 July.
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