Juan de la Cruz fuel-adjusted buying

Tag : passing link chain
Marie Antoinette's famous line, "let them eatcake," supposedly uttered when French peasants were protestingabout having no bread to eat, was a statement of an economicphenomenon, albeit a very naive one from someone who became queenat only 19.
Yes, when the supply or price of a commodity goes up, consumerseither consume less or shift to something else, which somehistorians say was what Marie Antoinette meant by her statement andnot the snooty uncaring interpretation it had been given.
The shift in consumer spending habits and the change in thecomposition of a shopping carts' contents are to be expected in thewake of rising fuel and food prices. But Filipino consumers, themajority of whom live on less than $1 a day, have learned to copewith rising prices over the last decades.
To delve more into how consumers are coping and dealing with thislatest economic setback, we asked some of the country's topretailers on the buying patterns of consumers these days.
SM's vice president Millie Dizon says its too early for them totell the changes in consumer purchasing patterns as the schoolseason just finished and this is a traditional up season in termsof sales.
Shopwise
Shopwise vice president for marketing Frances J. Yu took time towrite a piece in response to our questions that included: Has therebeen a shift in what people are buying these days because of therice crisis and the rice in fuel prices? Are people buying less orbuying the same but of lower priced items? How is Shopwise copingwith these changes? Are brands still important to consumers orprice is the only decision-making factor these days? What productsare the winners these days?
Yu's reply: "Gas and bigas seem to be the biggest woes facingFilipinos today. But we are not alone. The unprecedented rise infuel prices has triggered a worldwide economic pinch that has evenFirst World consumers scrambling to stretch their dwindlingbudgets. In the US, for example, the use of coupons has risensteeply since last September. Formerly reserved for bargainhunters, coupon clipping has apparently become a regular habit ofconsumers across income groups. There are even websites that teachconsumers how to clip coupons efficiently to save a substantialamount on their grocery shopping weekly.
"Here in the Philippines, we are faced with a triple whammy: Risingfuel prices, rising food prices, and the rising number of peopleliving below the poverty line. The retailer is the final link inthe supply chain, and thus closest to the consumer. The retailer ismost sensitive to changes in buying patterns, habits andpreferences as it happens day-by-day.
"At Shopwise, we have anticipated the shifts in buying behavior andpreferences and have adjusted our business model accordingly. Whileour sales continue to grow versus the same period of last year, wehave noted shifts in consumer buying patterns.
"The items that continue to do very well include basic commodities,such as sugar, oil, canned goods, noodles and fresh items. Itemsthat are not considered to be basic are not growing at the samerate. These would include toys, gadget, and clothes, among otherthings.
Downtrading noted
"In the nonfood grocery categories there also appears to be softerdemand. There is downtrading noted in which customers arepurchasing lower-priced laundry soap, lower-priced shampoo, andusing less fabric softener for their clothes, for example.Customers are likewise downtrading to smaller sizes in the shampoo,conditioner and detergent categories.
"In the area of fresh food, there is also some downtrading noted.For example, from Dinorado rice to Senandomeng rice, from lapu-laputo tilapia, from beef to pork.
"Other household items that appear to have been de-prioritizedinclude air/car freshener, deodorizer, insecticide, fabricsoftener, some food items like pasta (which is more "seasonal").But what is interesting to note is that the snack categorycontinues to grow despite the crisis.
"This has been a trend that we have reported for the past fiveyears. We really do have a snacking culture. New productintroductions such as Coke Zero has also led to healthy growths forthe beverage category.
Tuning to the customers
"In times like these, we try to be even more attuned and sensitiveto our customers' needs. We respond to the situation by sourcingand offering better or lower priced alternatives (such as housebrands, for example), by intensifying our promotional offers, andby generating savings in our operations and passing these savingson to our customers.
"Some of our promotional programs include a bimonthly flyer called'Save Big,' which features blockbuster offers for basiccommodities. We also recently introduced a price rollback programin which we select basic commodities for price offs. We alsocontinue to hold thematic promotions in which customers have achance to win such items as cars, electronic products, beautyproducts, free groceries and, most importantly, cash.
We cannot change our external environment. Thus we need to applythe collective experience and talent of our organization ininnovating for the benefit of the consumer in these difficulttimes. As they say, where there is crisis there is alsoopportunity.