Saturday, June 10, 2023

Consumers adjust their purchases to inflation with lower profits and hunt for discounts

The sustained increase in prices that inflation has generated in Costa Rica directly affects the way Costa Ricans do their shopping, since they have to adapt more and more to family budgets.

According to the Omnichannel Latam 2023 study, which was based on the Kantar firm, Costa Rican families carried out purchases in the context of high inflation. the comparison of lower volume products and the hunting of discounts by visiting more shopping channels.

In Costa Rica, inflation reached its peak in August 2022, when it reached 12.13%, according to the consumer price index calculated by the National Institute of Statistics and Censuses (INEC). Since then the index has slowed to 2.44% where it was located in April.

Monika Esquivel, director of Advanced Analytics for Kantar, explained that Costa Rica stands out in Latin America as it tends to buy smaller items at increasing prices, without this involving the acquisition of items with small volumes, such as sachets.

“In Costa Rica we tend to have larger sizes, so this activity is much more visible in the country, to look for a smaller size. They are not going to buy a bottle for a sachet, but they are starting to look for lower weight options,” commented Esquivel.

According to Esquivel, this behavior may be the result of a particular choice of consumers to purchase smaller products, or of an industry that chooses to generate less so as not to increase prices too much.

According to the report, the purchase of lower-volume products by Costa Rican consumers also corresponds to the decision not to sacrifice consumer categories with the creation of a pantry, where the priority of stocking items is maintained, but through smaller products.

“What started to happen a lot when the Costa Rican” is that it tries to protect that mission (to do stock), but with small sizes. Salaries have not increased as much as inflation, so people have the same amount of money, but they have to adjust to that money, especially in the scenarios that Costa Ricans used to design in large quantities,” Esquivel said.

Another of the most notable changes in Costa Rican consumption habits, which is noted in the Kantar regional study, is that people have taken up the search for discounts, visiting more and more shopping channels.

The director of advanced analytics for Kantar explained that these channels can range from pharmacies, grocery stores and supermarkets, to butcher shops or to online bookings such as Rappi or Uber, as well as the websites of chains such as Walmart.

“The tendency towards more points of sale in the end speaks to the price of the issue. In Costa Rica it is very interesting that people are waiting for promotions on different channels, from the first entry they will not compare between the channels, but the Costa Rican is a very marked price seeker”, commented Esquivel.

Across Latin America, consumers visited an average of 8.3 channels in 2022, according to a Kantar report. But in Costa Rica the figure was higher than the regional average in the first three months of the year, with a total of 9 channels.

This type of behavior is compared to the post-pandemic changes in consumption, where there is greater freedom to visit stores more often, and to purchase fewer products, which makes them perform less well.

“It’s a circle, people buy small sizes, pay higher prices than average, this one makes a little less, and then they have to replace those products, because they don’t have enough. That’s what the consumer adjusts to what they’re buying,” commented Esquivel.

electronic commerce

The Kantar report also includes a section on e-commerce, which shows that this branch of consumption has slowed down after the big boost it had due to restrictions due to the covid-19 pandemic.

By 2022, e-commerce will be the first to slow down due to health emergencies, as online spending will drop to -0.4%, driven largely by the costs that consumers must assume through the various applications that offer those services.

In Costa Rica, that behavior was not the exception. The Director of Advanced Analytics for Kantar stated that the end of the main event of the pandemic and the slow growth of the growth in this type of commerce.

“It’s slowing down because people aren’t making as many purchases through those channels anymore. “Additionally, in many cases, the prices are higher than those found in other channels, so that the consumer continues to buy, but the mission has changed to replace the products or get closer, and not to the storeroom,” said the expert.

For this reason, buyers continue to use online channels, but are more selective in how and when they use them, since in the current economic context, physical stores offer the opportunity to compare prices, sizes or brands. as well as using promotions.

Nation World News Desk
Nation World News Desk
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