Steadily climbing inflation is forcing many consumers to make efforts to save when filling the shopping basket. Some formulas appeared with the previous economic crisis, when the popularity of the so-called “white brands” spread, and now they have recovered again. Others use the possibilities offered by technology to save. Thus, profiles on dedicated networks have become popular to give advisors to spend less when shopping or applications to save when filling the shopping basket.
Despite the coincidence in the thrifty frenzy, in macroeconomic terms the current price crisis is very different from the one experienced with the bursting of the bubble in 2008. This is highlighted by professor and economist Alfons Fernández, who points out that in this time there is inflation, of 10.3% year-on-year according to the latest indicator in July, while in 2008 prices remained stable or even fell.
“Inflation is like a tax, but it’s the worst tax you can have, because it doesn’t discriminate between social classes”, emphasizes Fernández, a member of the financial economy committee of the College of Economists of Catalonia. “If we take into account that in 2021 prices already increased by 6.5% and that we are now close to 9% throughout 2022, this means that families have lost more than 10% of their purchasing power. Obviously, wages have not risen in line with this inflation, and this is what leads us to reduce real consumption”, he warns.
Behind this phenomenon of the high cost of living are two well-known elements: the increase in the prices of raw materials, light and fuels and the lack of production and stocks due to the pandemic, the war in Ukraine and the protectionist dynamics of some exporting countries.
According to Fernández, this general increase is reducing the amount of products and services that are bought, which can generate a “recession” in the economy that has already begun to be felt in the United States. If we add to this the inflationary dynamics already demonstrated, a “stagflation” is generated, a phenomenon where people buy less and less and with prices that continue to rise, reducing demand even more.
Despite the big differences between the current crisis and that of 2008, the response of consumers has been along similar lines: save where you can. Indicators from bodies such as the Bank of Spain also show that, after two years of the pandemic, people are willing to cut back on big purchases, cars or food, but not on leisure or travel. And behind this fact is the rise of mechanisms such as white brands, savings ‘apps’ or Instagram or Tik-tok accounts where hundreds of users share their methods.
white marks
The EAE Business School economist, Àlex Alegret, points out that white brands have returned to straddle inflation as the preferred formula for savings, among families and, above all, among the youngest. “People no longer buy it just because it’s cheap, but because it’s good and they feel good about it,” he explains. Thus, he points out that young people who are now starting to become independent have already gotten used to these products, and are their main customers.
According to a recent EAE study, 58% of Catalans have recently bought more “white brands”, and only 3% of respondents say they never buy them. The mainstays of these traditionally cheaper and simpler products are household hygiene, dairy and packaged foods. In Catalonia, this market is led by Mercadona, closely followed by Carrefour and Lidl.
According to Alegret, the Catalan law on large stores benefits smaller supermarkets such as Mercadona, which for years has made a big bet on its own and white-label products compared to large stores, where it has traditionally placed more emphasis on the ranges of traditional manufacturers. In the case of other chains such as Caprabo, the bet on the “white label” has also been increased by adding it to other elements that consumers are looking for today, such as organic or “gourmet” products. In fact, this sophistication is one of the factors that, according to Alegret, has allowed the white brands to maintain their weight from the previous crisis to the current one.
«Influencers» i «outlets»
Alongside this traditional savings formula there are new ones. A particular case is that of consumer “influencers”, who have multiplied on networks such as Instagram or Tik-tok. Under labels such as “savings” or “finances” there are very varied profiles that accumulate tips to spend less with shopping lists, weekly budgets and the times when there are more discounts. We also recommend ‘outlet’ food stores, such as Primaprix or Sqrups, where there are many ‘branded’ food or cleaning products about to expire or brought from other places in Europe where they are cheaper. This model has quite a tradition in the Anglo-Saxon world, but it is relatively new in Catalonia.
Finally, there is the case of apps like Too Good To Go, which appeared as a way to reduce food waste, but which, in the middle of the CPI escalation, have consolidated as another way to save. In this case, the application notifies the consumer of products about to run out that have huge discounts.