Monday, March 28, 2011
IN an era of falling wages and rising taxes you would imagine consumers would be fighting for every euro — but that doesn’t seem to be the case.
A recent survey has found that close to one in three consumers said that they rarely or never shop around for better prices.
When you consider that the price of groceries has jumped more than 5% recently and there are six big operators in the grocery market, it’s a wonder that people don’t look for more value.
And it doesn’t stop there: electricity and gas prices have gone up about 10% in the last year, while insurance costs have soared 12%.
Consumers, however, have never had more choice when it comes to their energy provider and there are a raft of online insurance comparison sites out there.
Founder of Moneycoach.ie, Frank Conway, said the problem lies with a lack of financial literacy.
"One reason I sense that people fail to shop for better value on financial products is they often may not know where to start. Lack of financial literacy is a root cause of failure to shop around," he said.
Figures in the National Consumer Agency (NCA) survey, conducted by Amárach Research, backs this up, showing that nearly a fifth of respondents found it difficult to compare prices.
Consumers said supermarkets, building-related services and pharmacies were where they had the most difficulty in comparing prices.
Simon Moynihan of consumer website, Bonkers.ie said ease of comparison is a "huge factor" in shopping around.
"When pricing is very clear — like petrol or diesel, customers will actively and frequently shop around. Where prices are difficult to understand, people will not shop around as much unless they have help," he said.
However, some of the findings in the NCA report are surprising. When it comes to energy providers almost two out of three people are unlikely to shop around for their energy supplier despite experts saying a household could save €147 a year by switching from the most expensive package on the market to the cheapest.
Also, when it comes to insurance just over half said they are unlikely to shop around.
"There’s nearly always a better deal to be had on the stuff we need, we’ve just got to get out there and find it. If it takes a couple of hours to save €100 on car insurance, great, then we’ve earned €50 per hour for our efforts," said Mr Moynihan.
Shane O’Leary of MyLunch.ie, which offers discounted lunch deals, said he thinks that as a nation we can sometimes get stuck in a rut going to the same shops and same lunch venues.
"Perhaps that’s a slight hangover from the good times — which was part of the reason our site came into being," he said.
When it comes to food shopping one in five respondents said location is the most important factor in determining where to shop while price is the most important for one in four.
Surprisingly, almost two-thirds of people said they would either sometimes or rarely check the price of a product they are buying, while one in 10 said they never check their receipts.
Bonkers is just one of the price comparison and discount websites that has sprung out of the recession.
One that has been around for a long time, however, is Pigsback.com and they are now seeing a "huge increase" in traffic, indicating that people are becoming more aware that there is value to be had.
Founder of Pigsback.com, Michael Dwyer, said that in many cases consumers have established new shopping patters such as shopping at discounter stores, buying deals and buying private label.
"At Pigsback.com we are witnessing a huge increase in traffic, notably related to the Mega Deal, which is a daily heavily-discounted deal on a restaurant, hotel break or spa treatment.
"We’re also seeing a continued surge in demand for grocery coupons from leading branded players. So the trend in seeking out value is continuing," he said.
Research from the consultancy firm Kantar Worldpanel found that Irish shoppers are increasingly choosing own-label over branded goods, which now account for 34% of money spent on groceries — the highest level ever seen.
David Berry of Kantar said shoppers are also now spending a higher proportion of their weekly shop at discounters such as Aldi and Lidl, and reducing the overall amount of money spent.
Price is still the number one factor in deciding where to shop for groceries, with 72% of people saying price is one of the main reasons for choosing where to shop compared with 60% in the second half of 2008.
Mr Moynihan the areas where people are likely to shop around are where they have to spend the bulk of their income — like groceries, energy and petrol, or where they are required to make one large payment — such as insurance and airlines.
"This makes a lot of sense because consumers are being squeezed by the Government with new taxes and by their employers with salary cuts, so they have to make up the shortfall somewhere," he said.
He said that huge winter bills have led to a spike in the number of visitors to bonkers.ie comparing energy prices.