Retailers start to realise massive price cuts are needed to boost consumption

On a market that has continued to contract this year because of salary cuts and of the redundancies announced in the public and private sectors, retailers rely on discounts more than in 2009.

The price cuts amount to as much as 40% in hypermarkets, and on the markets most affected by the consumption decline – such as electronics and home appliances, and furniture retail – few store chains transferred the VAT increase in the price as of July 1, risking to see their sales decline even more. On short term discounts can bring as much as a four-fold sales increase, but consultants warn they can affect the financial health of a company because of profit reduction.