It is no surprise that high prices in supermarkets are causing headaches for consumers in Serbia. However, despite having very high profit margins, retail chains are not always the sole cause of this situation.
The boycott movement against retail chains, which started in Croatia, has spread across the region, and consumers in Serbia are also participating.
In Serbia, a one-day boycott was held against five major retail chains – Deleze, operating “Maxi” and “Shop&Go”, Merkator, with “Idea” and “Roda”, as well as “DIS”, “Lidl”, and “Univerexport”, as a warning over high prices.
Although the one-day boycott led to a 36% drop in sales for these chains, it was not enough of a warning. According to the Consumer Protection Association “Efektiva,” some chains even raised their prices afterward. When appeals failed, the association called for another boycott, this time lasting five days. The idea is for consumers to refrain from shopping in these markets during those days to significantly reduce sales and send a message that the power lies in their hands.
Such an action has proven to be effective in Montenegro, where sales during the one-day boycott of the five largest retail chains fell by 56.14%.
Following this, the largest retail chain responded by urging the government to reduce duties in order to solve the problem and lower prices. Although citizens spend a significant amount of money in retail chains, it is questionable whether these chains are the sole culprits and what role manufacturers, suppliers, and the government play in this.
Economist Dragovan Milićević explained that this is now a more radical issue than the previous one-day boycott.
“Large chains are powerful organizations that define much about margin policies, pressuring weaker suppliers to grant additional funds, various discounts, and non-price barriers… However, I’m not inclined to make exclusive judgments about where the blame lies,” he says. He adds that there are additional issues and faults in the situation. “Large distributors are powerful organizations that are so strong that they can even pressure the chains themselves, as they exclusively distribute products from major marketing and market players, where every chain has to include them in their offer,” Milićević warns.
He emphasizes that attention should be focused on the brands represented by “NELT,” a key player in marketing strong brands.
“Distributors and suppliers who have invested a lot in building brands and marketing operate on the principle – ‘If you won’t, someone else will,’ as they already have created demand,” explains Milićević.
According to him, the current boycott is somewhat misguided. “What about the small retailers where prices, due to their limited strength, are generally higher than in larger chains? This is, above all, a systemic issue, a problem of import lobbies, big players, and the cheap euro… all of this creates the opportunity for the appropriation of extra profits, which of course go to powerful systems,” Milićević notes.
Regarding the role of the state, Milićević suggests that it could reduce levies by lowering excise duties on alcohol and other goods or by cutting VAT.
“However, if someone were to mention this, they’d be quickly sent to an institution like Laza Lazarević, because the state ‘needs’ funds to pay teachers and others in these times,” Milićević adds.
Dejan Gavrilović, president of “Efektiva,” tells Danas that the biggest problem lies with the retailers.
“The report from the Commission for Protection of Competition (KZK) states that margins have doubled from around 17-18% to 36%, and in Deleze, they have even reached 45%,” he reminds.
According to Gavrilović, consumers are certainly the primary target for retailers.
“We believe they are the most responsible in the chain, and everything points to that being true,” he states.
Gavrilović questions why the same product costs 400 dinars in one store and 900 in another. “This is not the fault of the importers, but rather the greed of large retail chains. They are the first address for this problem. Their revenue has quadrupled, as the KZK report also shows,” he emphasizes.
Regarding the state’s role, Gavrilović believes that there is little it can do.
“It can only slightly reduce VAT, which certainly won’t happen because it would affect the budget. I don’t see any other levies that influence the high prices,” he adds.
He further states that even if the government reduced taxes and contributions for workers, it wouldn’t significantly affect prices, as wages are still very low.
“Even that wouldn’t have much impact on prices, so it wouldn’t make sense,” concludes Gavrilović.
