Hopefully, good things come to those who wait. In June it could be read in the Süddeutsche Zeitung that the German food industry and the pertinent retail industry want to raise their prices. The Süddeutsche Zeitung uses the headline “The End of Low-Budget” (Schluss mit billig). And what at first looks like bad news for the consumer, upon closer inspection and consideration it actually bodes well. For years the big retailers have fought cut-throat price wars. Everyone wanted to offer the most advantageous range of products. Many commodity groups could only be offered at cost price and often even below. The industry took part in this ruinous game for a long time through price concessions, promotions and rebates. The terms used for these rebates became more and more grotesque. And in the end it even lead to closing tens of thousands of small retail stores, the so-called mom-and-pop stores or corner shops.

Scandals regarding the sale of tainted deep-frozen meat and cold cuts brought to light, what insiders had known for a long time: Low-budget concepts of retail had been financed more and more often via manipulation of quality. At least some pricing policies did no longer allow for cost-effective and gainful production of products at a decent quality.

While in the United States households spend 20% of their income for groceries, in Germany it is only 13%. Even though these figures cannot be compared downright, it shows the tendency that groceries are cheaper in Germany. As I have said, consumers pay dearly for this cheaper purchase, because they get a lesser quality. This development was facilitated by the no longer controllable muddle of regulations and laws of the European Union. Nobody really knows anymore, what is allowed and what is forbidden, which makes manipulations during production a lot easier.

Taking the bull by the horns and raising prices should be embraced. The consumer has the right to receive quality just as the industry and retail have the right to receive payment for their services that is cost-effective and allows for turning a profit. Everything else only destroys trust. Markets cannot live off a cutthroat competition.

Markets live off a trusting coexistence of all market partners. And part of this entails not to abuse market power.

When developing new strategies it depends on putting market leadership in regards to quality into the center of our efforts. The best does not base his business on price. He does not have to be afraid of the competition nor of the market power of retail. On top of everything he can be sure that the consumer is on his side. As self-evident as this may sound, a lot of this truth has been lost sight off in the last few years. Several years ago there was much ado about greed being a good thing for Germans. It was a simple verbal commercial gimmick whose desired effect failed to appear. The enterprise that tried to chum up to consumers with this slogan recently had to report stagnating sales. Germans are more intelligent than some people might thing and so by all means they can be trusted to accept higher food costs if it is based on a solid increased output.