From Price Wars to Value Creation: How Inflation Is reshaping the Supermarket Sector

2023 and 2024 marked record-breaking years for Dutch supermarkets. Revenues crossed the €50 billion threshold: a historic milestone. But this growth wasn't fueled by rising volumes; the real engine was inflation, and it's fundamentally reshaping the landscape of retail. 

Inflation-Fueled Growth: A Closer Look 

As consumers tightened their budgets, prices on everyday staples like bread, sugar, snacks, and olive oil surged. Major A-brands manufacturers raised prices by as much as 20%, driven largely by higher input costs such as dairy. At the same time, private labels gained significant ground. The reason is simple: when price gaps widen, consumers gravitate toward cheaper alternatives. 

This shift is affecting not just shopper behavior, but the entire revenue model across the value chain.  

A New Type of Consumer Is Emerging 

Today’s shoppers are price-conscious and digitally savvy. In 2024, 52% of Dutch consumers actively searched for the lowest price, up from 37% the year before, reflecting a growing shift toward price-conscious, digitally savvy shopping behavior. Brand loyalty is quickly giving way to price comparison tools, discount apps, and coupons. 

Retailers have responded with aggressive promotions. In 2023, nearly 25% of supermarket revenue came from discounted items, with deals sometimes slashing prices by 70%. That may drive short-term volume, but at a steep cost: eroded margins and diminished long-term value. 

The Risk of a Race to the Bottom 

If this trend continues, it will present a structural issue. Brands lose share to private labels, retailers feel the squeeze on margins, and in the race to be the cheapest, everyone loses their ability to differentiate. 

It’s a vicious cycle: More price pressure → more promotions → lower margins → less room for innovation and quality → less differentiation → more price pressure. 

And that's not a sustainable business model for the future. 

The Strategic Pivot: From Discounting to Value Creation 

The way out isn’t lower prices - it’s smarter value creation. Brands and retailers must work together to shift the focus from promotions to propositions, offering consumers meaningful, value-driven reasons to stay loyal. 

Here are four strategic pillars for a more resilient and profitable future: 

1. Value-Driven Portfolio Design (Premiumization) 
Develop a holistic vision across pricing tiers, with clear roles for value, core, and premium offerings. Premium doesn't just mean expensive, it means relevant and differentiated. 

2. Smart Price Positioning 
It's not about being the cheapest. It's about offering the right price for the right value, backed by transparency, logic, and aligned with what matters most to consumers. 

3. Purposeful Promotions 
Stop using discounts as a default lever. Instead, design promotions that build loyalty: think personalized offers, savings programs, or exclusive product bundles. 

4. Brand Distinctiveness 
In times of price pressure, clarity matters. Communicate what your brand stands for, whether it's origin, sustainability, quality, or transparency. These attributes still resonate, even in a cost-sensitive climate. 

5. Collaborate With Retailers 
True value creation happens in partnership. Share data. Align on customer insights. Co-create campaigns. It's time to move beyond transactional relationships and build shared growth strategies. 

Final Thought: The Lowest Price Doesn't Win 

In a market increasingly driven by price, the real opportunity lies with brands and retailers who can connect with consumers on quality, purpose, and relevance. 

 “If all you sell is price, you become a commodity. But if you sell meaning, you stay valuable, even when everything costs more.” 

Used sources 
This blog draws on recent insights into the Dutch supermarket sector and consumer trends in 2023–2025.