In Serbia, the issue of high prices has been a topic of discussion for some time. To pressure retailers to lower prices, the “Efektiva” Association has called for a boycott of major retail chains since the end of January.
In October of last year, the Competition Protection Commission launched an investigation against four retail chains in Serbia, suspecting price-fixing agreements and violations of competition laws. While awaiting the findings of the Commission, the question arises whether the entry of a new retail chain into Serbia could lead to lower prices.
Experts speaking to Euronews Serbia agree that increased competition in the market should contribute to lower prices.
Bojan Stanić from the Serbian Chamber of Commerce explains that the arrival of a new player in the market could have two effects.
“Certainly, prices should drop if there is more competition in the market, meaning if there are more retail chains. On the other hand, the issue of workforce arises. Who will work there? Since new sales spaces would open, this would lead to a shift in the workforce. To prevent this shift, retailers would need to raise wages to keep employees, and this could then be passed on to the final price of the products offered in their stores,” said Stanić in an interview with Euronews Serbia.
He added that, theoretically and practically, the entry of more players into the market would lead to better competition, which should result in consumers having more choices and more competitive prices.
Recently, German and Russian retail chains have entered Serbia, but there has been no decrease in prices. In fact, prices have continued to rise. However, Stanić emphasizes that the arrival of foreign investors, which includes retail chains, is always in the interest of the country.
The “Efektiva” Association believes that the entry of a new retail chain could lead to lower food prices.
“Whenever competition increases, it leads to lower prices or better service quality. The greater the competition, the better it is for consumers. I believe that the market competition would intensify because a new player coming to the market would not be able to establish itself easily unless they offer some benefit to consumers, and that benefit in the retail sector can only be lower prices,” said Dejan Gavrilović from the association.
He pointed out that consumers do not care which country a retail chain comes from, as long as prices are affordable and the quality of food meets expectations.
“Most of the population doesn’t look for exclusivity. Those who can afford exclusivity aren’t concerned with prices. They will buy wherever they find what suits them,” he added.
Gavrilović also stated that consumers are already aware that existing retail chains significantly mark up goods, more than is reasonable, and many would switch to a new chain if it offered lower prices along with a good marketing campaign.
“We have the example of Russian chains, which are gradually expanding and opening new stores. I see that they are getting busier, with bigger crowds, and word of mouth is spreading. Good advertising easily reaches consumers, and this means that the arrival of new players would certainly force the existing ones to reconsider their pricing policies and lower prices,” said Gavrilović.
During the previous Serbian government’s mandate, it was announced that a law had been prepared to regulate how prices are formed and how the market should function. Veljko Mijušković from the University of Belgrade’s Faculty of Economics recently told Euronews Serbia that such a law does not constitute excessive interference in the market economy.
“Market regulation by the state, through laws ensuring fair competition and protecting consumers, is considered standard practice and does not represent excessive interference in the market economy,” Mijušković explained.
Many countries have laws that regulate price formation to prevent unfair business practices.
