This environment is not short-term, and proof of this is that, in the future, it is estimated that brands will continue applying price increases to deal with cost increases, trying to maintain healthy margins.
In Mexico there is a long tradition of summer promotions driven by self-service that each year promises to generate real savings in households through their promotions, the most famous being the 3×2.
With prices on the rise, the summer promotional strategies developed by retailers and manufacturers do help the shopper to get better returns for each peso invested in discounted products. This in turn drives spending and short-term consumption in the channels that participate in these summer initiatives.
Derived from the above, one of the main effects of this promotional season is to bring traffic from other channels, such as the traditional one, to large-format stores such as self-service stores, who usually execute and communicate this initiative mostly.
The result of the summer promotional season, although positive, usually varies due to the type of activity (such as direct discounts, combo or multiple strategies, and the very famous 3×2), the depth and validity of the discounts, and the categories involved and their price dynamics.
For example, today we find that there are two large groups of categories and products in terms of their price dynamics in the year: a group that has increased prices below official annual inflation, and another group that has increased prices above of said inflation; in some cases with high double digit increases.