“The consumer today is much better informed and more demanding.” For Michalis Panagidis, President of the Pancyprian Association of Supermarkets (PASYPE), this is perhaps the biggest change currently taking place in the market.
Cypriot consumers are no longer looking only for the lowest price. They also assess quality, customer service, product availability and the overall experience offered by a supermarket.
At the same time, the sector faces major challenges and significant changes. Acquisitions and mergers are increasing, investment in technology and automation is becoming essential, while staff shortages are placing growing pressure on businesses.
In his interview with Economy Today, Mr Panagidis explains why the supermarket market is moving towards greater concentration, how he assesses the progress of e-kalathi and why he believes the next battle between supermarkets will not be decided by price alone, but by a combination of price, quality, technology and shopping experience.
How would you describe competition in the sector today? Has it intensified or are you seeing greater market concentration?
Over the past few years, FMCG retail in Cyprus has undergone significant changes, acquisitions and mergers, both in the supermarket sector and across the wider supply chain. It is clear that the market has become more concentrated, and I believe this trend will continue in the coming years.
The Cypriot market is relatively small in size, which in itself creates pressure to achieve economies of scale. The major investments now required in technology, logistics, storage facilities, online services and store upgrades make it difficult for smaller businesses without the same financial capacity to survive.
At the same time, competition has become particularly intense. Consumers have more choices than ever, while price comparisons can now be made instantly through digital tools and applications. This forces supermarkets to operate with even greater efficiency and speed.
Nevertheless, I believe smaller supermarkets and local stores will continue to have a place in the Cypriot market and will be able to differentiate themselves. Personal service, a relationship of trust with customers, specialisation in specific product categories and a more personal shopping experience remain important advantages, particularly in a society such as Cyprus where personal contact continues to play an important role.
How consumer habits have changed
The pandemic, inflation and the rising cost of living have changed the way people shop. What is the biggest change you see in Cypriot consumers today?
The Cypriot consumer has changed significantly over the past five to six years. The pandemic acted as a catalyst for many changes that might otherwise have taken much longer to occur.
Consumers today are much better informed and more demanding. They compare prices, research products and look for offers, while also assessing the overall shopping experience. They do not look only at the price on the shelf. They consider quality, freshness, service, speed, product availability and the overall convenience offered by a supermarket.
In recent years, partly because of inflation, consumers have become much more careful with their purchases. There is greater planning, more price comparison and clearly greater sensitivity to offers and discounts. At the same time, however, consumers continue to seek quality and value for money.
Technology has also become much more widely accepted. Online orders, promotional apps and digital payments have now become part of everyday life for many consumers in Cyprus.
The impact of e-kalathi
Several months have passed since e-kalathi was introduced. What do you believe its real impact has been?
e-kalathi was an initiative whose main aim was to inform consumers and provide an additional price-comparison tool in the market.
It certainly gave some consumers the opportunity to monitor the prices of certain basic products more easily, particularly at a time when the rising cost of living is a major concern for households.
However, I believe that in practice its real impact on the market is more limited than initially presented. The Cypriot supermarket market was already highly competitive before e-kalathi was introduced, with supermarkets competing continuously on both prices and promotions.
Cypriot consumers have always compared prices, assessed their options and looked for offers. e-kalathi simply added another information tool, without fundamentally changing how the market operates or the overall behaviour of consumers.
It should also be noted that price alone does not reflect the total value a consumer receives from a supermarket. The shopping experience is much more complex and includes factors such as product quality and freshness, variety, availability, service, cleanliness, ease of access and, more broadly, the trust a consumer places in a chain.
e-kalathi presents individual product prices selectively, without being able to capture the overall picture or the complete experience offered by a supermarket. This is why I believe consumers ultimately continue to make choices based on a combination of factors rather than exclusively on the lowest price.
At the same time, it must be recognised that supermarkets in Cyprus already operate on particularly tight profit margins and in a highly demanding environment, with continuously rising operating costs. Despite these pressures, competition remains intense and efforts to keep prices under control are a daily task.
As the Pancyprian Association of Supermarkets, we believe that every initiative aimed at informing consumers is positive. However, the real value in retail cannot be limited exclusively to a price-comparison platform or individual products. The overall experience, quality and reliability remain the key factors that ultimately determine consumer choice.
Price versus shopping experience
Supermarkets are now investing heavily in technology and digital services. Will the battle of the future be decided mainly by price or by experience?
Price has always been and will remain a very important factor for consumers. Particularly in Cyprus, where the cost of living is a major concern for households, price will continue to influence purchasing decisions.
However, it is no longer the only factor. Consumers are increasingly seeking convenience, speed and a better experience.
The investments we are seeing today in self-checkouts, personalised offers, online shopping and delivery services are not accidental. Supermarkets are trying to better understand consumer needs and create a more complete experience.
One-stop shopping is also an important element. Consumers want to be able to meet many of their needs in one place, quickly and easily.
Over the coming years, I believe competition will increasingly depend on each chain’s ability to offer a combination of price, quality, technology and experience. This is where real differentiation will be decided.
Private labels gain ground
Private-label products are steadily gaining ground. Is this a result of the rising cost of living or are we seeing a deeper change in consumer habits?
Private-label products have indeed grown significantly in recent years, and this is not exclusively the result of rising prices.
Consumers today are more open to trying new products, particularly when they believe they offer good value for money. Supermarkets themselves have invested significantly in improving the quality of private-label products and, in many cases, these products now compete successfully with established brands.
In the Cypriot market, we are seeing private-label products continue to increase their share in certain product categories. However, there are also categories where brand loyalty remains very strong.
Cypriot consumers continue to trust well-known brands, particularly products associated with quality, safety or personal preference. Therefore, I believe branded products and private labels will continue to coexist dynamically in the market.
Technology and the future of shopping
A few years ago, few people imagined online grocery orders or self-checkouts. How do you see the market evolving?
The changes we are seeing today will become the norm in the coming years. Technology is constantly evolving and retail cannot remain unaffected.
Online grocery orders, self-checkouts, mobile payments and digital services will expand further. Younger generations of consumers have different expectations and a different relationship with technology.
At the same time, however, the human factor will never cease to be important. Particularly in the Cypriot market, where personal service continues to have value, human contact will remain crucial.
This is especially true in fresh-produce categories, where consumers seek trust, advice and service.
One of the biggest problems facing the sector today is the shortage of human resources. Supermarkets are increasingly struggling to find and retain staff, leading to greater investment in automation and technology.
At the same time, businesses need to offer more attractive employment packages, better working conditions and more opportunities for career development in order to attract workers.
The sector’s biggest challenges
What do you believe is the biggest challenge facing the sector in the coming years?
The supermarket sector is currently facing many challenges simultaneously. On the one hand, there is a need for major investment in technology, digital services and store modernisation. On the other, there is intense competition and the need to maintain affordable prices for consumers.
At the same time, operating costs continue to rise. Energy costs, rents, transport and labour costs are placing significant pressure on businesses.
Meanwhile, consumers are becoming increasingly demanding. They want better prices, more choices, a better experience and faster service.
The biggest challenge for the sector will be to balance all these factors without affecting service quality and without significantly burdening consumers.
I also believe that the true complexity of retail is often not sufficiently reflected in public discussion. Supermarkets do not have only a commercial role. They are a critical part of the economy and everyday life.
Particularly during periods of crisis, such as the pandemic, the sector demonstrated that it can ensure the smooth supply of the market and support consumers under extremely difficult conditions.
The challenge in the coming years will be adapting to the new era while maintaining consumer trust. This will require investment, flexibility, proper planning and close cooperation among all those involved in the retail supply chain.
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