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Recession shopping trends

Published: 
Thursday, May 10, 2018
Consumers hunting for bargains, buying in bulk

T&T’s decline in gross domestic product (GDP) has ranged from -0.3 in 2014 to -6 in 2016, according to the Central Bank’s Economic Bulletin 2018. This has affected consumer patterns withs latest trends showing people gravitating towards buying local.

“Everything has to do with the economic climate. Consumers are moving away from the high-end products to local goods which is a significant sign because buy local leads to greater economic activity,” said director of the Ministry of Trade’s Consumer Affairs Division (CAD) Dexter Morgan.

Trends also show that consumers are increasingly exercising their rights, becoming more vocal in their claims of defective or damaged goods.

Annually, 800 to 900 complaints are made to the CAD. The resolution rate is between 62 to 75 per cent. Those that fall outside the realm of moral suasion are addressed by the court if consumers files legal action.

According to Morgan, there has been an increase in complaints about faulty cellphones and car engines.

“The suppliers are saying on the one hand it’s the quality of the gas and the consumers are complaining that the defect is not repaired,” he said.

“We have complaints with both new and foreign used vehicles. We have been meeting with suppliers and we usually get the services of VMCOTT to assist. We do site visits and we test the vehicles and use that information to represent the interest of the consumer.”

There are numerous complaints about phones malfunctioning a day or two after purchase, he added.

Consumers are also complaining about high cost of goods. However, as Morgan pointed, out the CAD is not responsible for price regulation.

“People often tell us that food prices are increasing and call on the Division to act but based on a free market economy, suppliers are not obligated to sell their goods at a particular price.

“We have far moved away from this based on an agreement we signed with the World Trade Organisation…but price control in a realistic sense can lead to black market,” Morgan said.

Trends in food prices

Every month, the CAD conducts a retail food price survey on a basic basket of 118 items in 20 areas across Trinidad and eight areas in Tobago. Items include milk, four, oil, cheese and rice.

During the first quarter of fiscal year 2017/2018, the CAD observed an overall 0.6 per cent increase in food prices, followed by a 0.39 per cent increase in the second quarter of fiscal year 2017/2018 ending in March. This slight increases is also reflected in headline inflation which stood at a low of 3.1 per cent in 2017.

With few exceptions, the price of food has increased slightly over the first few months, Morgan noted.

“The major exceptions to this were diary products, for example milk, oils and fats, which rose in price by 8.1 per cent and 5.7 per cent respectively,” he said.

He said this was due to increases in prices in the global market for these products.

Taste for local food

Trends in consumer purchasing are constantly changing. The same is true for food shopping habits, as emerging consumer food values shape purchasing decisions and tastes.

The United States Department of Agriculture (USDA) Foreign Agricultural Service, in its 2016 report on T&T’s retail food sector, identified a trend toward low-fat and health foods and, to a lesser extent, organic products. According to the CAD, this has resulted in a preference for fresh locally produced food.

The CAD survey showed that 62 per cent of the 205 people interviewed made a conscious effort to shop for locally produced items.

“Even with imported food, there is a high preference for regional products. Barbadian and Jamaican products are particularly popular locally.

“Local and regional suppliers are often more adept at catering to the unique ‘Trini’ palate. It can be extrapolated that there is a growing need for local food based primarily on a trend towards eating healthier and in some cases due to the lower cost of local food given the economic climate,” Morgan said.

Locally manufactured cereals and milk were more popular with consumers than foreign brands because of the big price disparity. However, high-end products maintained market share as there are those who can afford to shell out $50 for a box for imported cereal.

Impulse buying

The survey showed that 61 per cent of consumers always use a list and 13.7 per cent use a list sometimes. Approximately 75 per cent of those surveyed used a list to purchase grocery items and 41.5 per cent of those who used a list sometimes deviated from it.

Morgan said this is an indication that the vast majority of consumers are budgeting and using a list as a regulator to ensure budgets are adhered to with few exceptions.

Conversely, when asked about purchasing habits when tempted to impulse buy through an attractive display or through a buzz being created about a product, 62.4 and 66.8 per cent respectively said they would not purchase the product.

The majority of consumers are not easily tempted to buy on impulse, as less than 20 per cent of those surveyed showed any indication they would usually impulse buy.

Morgan explained that on the other hand, approximately 60 per cent of consumers said they would purchase more if an item was on sale, indicating price sensitivity in current purchasing habits.

“Consumers are purchasing carefully based on price and their needs,”he said.

Bulk and bargains

Consumers who do bulk buying purchase items once a month, the survey showed.

Of consumers surveyed, 40 per cent said they shop for groceries once a month and when asked about purchasing preference, approximately 40 per cent said they preferred to bulk buy.

Morgan said while many consumers believe it is more cost effective to buy in bulk, they could not do so due to lack of funds and had to instead purchases groceries monthly or fortnightly.

In the case of bargain hunting, 60 per cent said they purchased items on sale, an indication that consumers are seeking deals.

This trend was further confirmed by a new strategy in various large supermarkets which now sell affordable “bargain” hampers of various essential items at prices ranging from $150 to $300.

When asked about this practice, supermarket managers said there is an increased demand for this package from people wanting to purchase groceries at an affordable price and those wanting to donate to charity.

Consumer tribunal

Given the current economic climate, increased protection for consumers is even more important.\

The Cabinet approved National Consumer Policy 2018-2023, intends to address legal, institutional and administrative gaps in current consumer related legislation and is a precursor to revised, improved consumer protection laws.

The legislative brief has been forwarded to the Office of the Attorney General following which it will go to Parliament.

Morgan said he hopes the legislation will be implemented by year’s end as it is critical that a consumer tribunal comes on stream soon to facilitate settlement of disputes at a negligible cost to the consumer.

The tribunal will act as a quasi-judicial court and its remit will include focus on guarantees in terms of refunds and warranties, he explained.

The legislation will also address product safety and implementing a Caribbean rapid alert system.

“If there is a particular good or non-food items deemed to be harmful, or pose a risk to the consumer, and that comes to the attention of Caricom, all member states can make an intervention.

It’s an interactive portal as well where consumers themselves can participate,” Morgan said.

Consumer challenges

While consumers are the biggest players in the market, a stand alone entity to address concerns is lacking.

“We have no consumer NGO and, as a result, that collective consumer power is lacking,” said Morgan

“In other jurisdictions, for instance, if the price of a product goes up by two cents, collectively consumers will not buy it. If consumers come together and decide they are not going to pay the price for a particular item, the price will obviously fall,” Morgan said.

Another factor is the spending disparity between consumers, a noted difference between the haves and the have nots.

“If you have a certain income you can obviously afford to buy whatever products you desire as opposed to the consumer who cannot,” Morgan said.

He said there are a number of short comings in existing consumer legislation regarding the relationship between the consumer and the supplier.

“If suppliers repairs an item once, twice or three times, it should not be done a fourth time. After at least two times there should be a refund or exchange and depending on the nature of the complaint this should be immediate,” he said.

Current legislation does not allow the CAD to take a supplier to court.

However, the CAD continues to seek to empower consumers by providing price information for comparison shopping and encourages suppliers to be reasonable in the sale of produce and food.

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