Colla, Enrico
July 2005
Revue Fran�aise du Marketing;jui2005, Issue 203, p7
Academic Journal
Since a new commercial legislation bas been approved in France in 1996, the price of the well known industrial brands are continuously increasing and their price differential with retail brands -- and lowest priced products -- is also increasing. Moreover, general level of supermarkets and hypermarkets price are now more or less the same and their difference with hard discount is bigger and increasing. Market shares of hypermarkets and supermarkets are weakening, compared to hard discounts. All those phenomena seem to be, at least in part, a consequence of the increasing gross margins of retailers and particularly, of the increasing � back margins � -- on well known industrial brands in the same years. This article tries to demonstrate that French commercial legislation is the origin of these phenomena. Galland law bas reduced price competition of retailers on well known industrial brands and this has favoured an increase in gross margins of the entire assortment. Moreover the reduction in price competition intensity in retail industry has favoured also a reduction in the level of competition among producers of those brands. The two effects cumulate and favour a continuous increase of those prices, and they develop interformat competition, competition by differentiation and a new type of promotional campaigns on price, contrary to the Galland law.


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