How much more can retailers push prices with discounts before hitting a wall?

Retail stores are starting to run out of room for further price cuts with endless promotions and discounts, says Trade Intelligence.

The 2026 South African FMCG Retail Outlook suggests that the consumer goods retail sector is approaching a tipping point after several years of inflationary pressure and intense competition.

While value remains essential, retailers face limits on how much cost pressure they can absorb internally in this fast-moving consumer goods (FMCG) market.

Manufacturers are also bearing the cost, Trade Intelligence senior analyst Nicola Allen points out. Ultimately they can't invest in quality products, which in the end is just not good for the whole sector.

"Most of the retailers in their last annual reports are reporting lower internal inflation, which means they're absorbing a lot of the price increases that the manufacturers are trying to pass over to them, which is valid, because they've also got increasing input costs... You've been talking about the global mayhem going on, and that affects supply chains and crops, and input costs ultimately."

In South Africa, promotional intensity levels are sitting at 25-35%, according to the report.

"It's getting to a point possibly where, not this year maybe, retailers do run out of room to discount further because stores are blanketed with promotions... But the real damage is coming in terms of margins and returns on investment for retailers, and also for the manufacturers who are ultimately being squeezed to provide those discounts."

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While there is certainly a subsegment of the market "charging around from shop to shop" to benefit from the various specials, there are also those people who're saying "I'm just going to shop wherever I'm going to shop and trust that the prices there are reasonable."

This everyday low pricing approach is the one being taken by Walmart, which just recorded a great sales year in the US.

Allen says it's one they're going to be watching very closely, to see whether this multinational retailer finds the same success locally at their newly-opened stores in Johannesburg.

For more detail, listen to the interview audio at the top of the article