Cool to be Frugal

12 12 2008

piggy-bankAccording to Andy Bond, the Chief Executive of ASDA, its now becoming cool to be frugal and not so cool to be frivolous and wasteful. He feels that consumer’s shopping habits are changing and a new generation of shoppers who are thrifty are emerging as the credit crunch begins to bite even further.

So what does this really mean? It means that consumers will now focus more on products that offer them value for money and will aim to eliminate waste. Value for money doesn’t really mean something that is priced less or discounted. It is actually something that offers satisfaction and quality for its price. Consumers will increasingly try to differentiate their “needs” from their “wants” and think carefully if they really need something or do they just want it. For example, ASDA noted that consumers are beginning to shift from buying ready meals to buying ingredients and cooking at home. People are also beginning to mend or fix items rather than getting rid of them and buying new ones. Cobblers, for example, have seen their business increase since consumers are coming in to get their shoes mended rather than splashing out on a new pair. A quick search on Google Trends showed that visits to the comparison site moneysupermarket.com and myvouchercodes.co.uk which lists voucher codes across a variety of stores had more than doubled.

What’s really interesting is the 40% increase in the number of people who are ignoring best-before dates and consuming the product rather than throwing it in the bin once it is past its sell by date. Perhaps the increase has also something to do with the numerous reports on saving money on television featuring people who regularly consume food, as long as it looks fit, well past the best before date. Consumers are also freezing leftover food rather than wasting it and sales of bottled water and smoothies has also been said to have decreased since many are opting to fill tap water and eat fresh fruit instead.

It is important then that retailers spot this trend and adjust their business models accordingly in order to survive the downturn. Thrifty consumers would focus on long term value and would be willing to spend a little bit extra on an item that is likely to last longer than buy something cheaper in price which would also be cheaper in quality and hence not last as long. Rather than reducing prices on cheap Christmas stocking fillers that perhaps wont even last till next Christmas, retailers should instead focus on reducing prices on items that actually are of some use to the consumers. Also, thrifty consumers are less likely to buy items on impulse which retailers greatly depend on. So, businesses should make sure that they are really operating on a low cost model which aims to eliminate waste as that would be the only way that they would be able to offer low prices and good service at the same time.

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Credit crunch benefits Charity shops

19 08 2008

Oxfam’s annual sales reached £80million, revealed its director of trading, David McCullough, while speaking to the Mail on Sunday. Consumers are turning from retailers to discount stores and charity shops to find bargains as the crunch is leaving them with less money in their pocket. Popular items include books and dvds.

Retailers like Tesco, Asda and Sainsbury’s are also doing their bit to attract customers affected by the credit crunch by cutting the price of two litre bottles of milk amongst other essential items.

The credit crunch seems to be a boon in disguise for discount stores and charity shops although consumers affected by it may beg to differ.

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$143 for a Barrel of Oil

30 06 2008

The cost for a barrel of oil reached a record level of $143 today (30 June). The direct implication of this is likely to be a rise in prices of petrol and diesel. But it is not only the motorists who are going to be affected, everyone will be affected either directly or indirectly. For example, consumers are already beginning to feel the pinch as prices of day to day items such as bread, eggs, cooking oil, etc are beginning to rise. There are different reasons of this inflation in prices of which one is the rise in fuel prices. The rise in fuel prices leads to an increase in transportation costs which is added to the price of the goods and unfortunately passed on to the consumer.

It is no surprise then that last week, discount stores Aldi and Lidl announced substantial growth in like for like sales. The weekend saw a “price war” between Tesco and Asda as they tried to lend a helping hand and attract consumers already struggling with rising fuel prices and energy bills by slashing prices of everyday items by as much as 50 percent in some cases. Consumers are increasingly beginning to shop around with some using price comparison sites like mySupermarket.co.uk looking for better deals rather than just relying on one retailer. Other retailers like Sainsbury and Morrisons are also reducing prices and might also be forced to join the war by reducing prices in order to retain their customers.

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Boom for Discount Stores

25 06 2008

According to recent figures, discount stores Aldi and Lidl have recorded sales growth of 20% and 14.9% respectively on a like-for-like basis. Even Iceland, which specialises in frozen food, has had a growth of 15.2%. Now this may not look that significant, unless you compare it to the growth reported by the established supermarkets-Tesco, Sainsbury, Asda and Morrisons-which reported a growth of 6.3%, 4.3%, 7.9% and 10.2% respectively.

Read more at:

http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article4208031.ece