NCA survey results – Consumers are shopping around less. But why?

Back in January, the National Consumer Agency released the results of a survey (and strangely, seemed to release pretty much the same survey results again last week here) where their headline revelation was that “The number of consumers shopping around has dropped from 75% to 67%”.

Given that as consumers the world and their mother in the Government, the Competition Authority and the selfsame National Consumer Agency are telling us to shop around more to get the best value for money in these difficult economic times, wouldn’t it be interesting to know why consumers are shopping around less, rather than more?

We’re told in their press release that “we have seen very positive outcomes for consumers as competition has intensified driven by consumer demands for value” and a quote from Ann Fitzgerald tells us that “The research shows that consumers continue to seek out value, particularly in the grocery sector, but it also demonstrates that overall, fewer are shopping around”.

Worrying trend, but no explanations provided

Ms. Fitzgerald tells us that they find this reduction in shopping around as “worrying because if that trend continues and we fall back into old habits, becoming complacent in our shopping behaviour, we can expect retailers to take advantage resulting in less competition and higher prices”.

All very true – less shopping around could reduce competition and lead to higher prices. But still, no explanation as to why this is happening now – I read the press release and the report produced by Amarach Consulting, who did the research for the National Consumer Agency, but nowhere can I find any suggestion as to why consumers are shopping around less, rather than more.

Consumers don’t shop around as much now – it’s because they can’t

I was wondering how much of the drop in consumers shopping around could be ascribed to consumer potentially returning to the bad habits of the good old days of “rip off Ireland”, or how much of it could be blamed on the actual reduction in choice that consumers are facing because of the number of places that are closing down because of the recession.

When you look at business closing down, reducing hours or services, or closing and consolidating branches, it’s logical to think that part of reason for people shopping around less is because they actually can’t – there isn’t the choice available any more.

Think about it – take holidays for example. Budget Travel, Thomas Cook, Toolin Travel and many many more have all closed down, while others like Sunway Travel have closed offices. (A full listing of closed travel agents can be found on the Commission for Aviation Regulation website). All of these closures have the impact on consumers that there is less choice and less competition, and less opportunity to shop around.

Look at what’s happening in the financial services market at the moment as well. Halifax is closing all their 44 branches, Postbank is closing their branches, National Irish Bank is closing 25 branches, ACCBank is closing 16 branches, First Active closed 45 branches, and  PermanentTSB closed 11 branches.

Added to that significant reduction in banking choices, any merger between EBS, Irish Nationwide and anyone else will also only lead to further branch closures, potentially up to 50. And that’s before AIB and Bank of Ireland begin to look at how many branches they don’t need.  Again, all of these closures have the impact on consumers that there is less choice and less competition, and less opportunity to shop around.

Less choice will mean higher prices

In any other area of business in Ireland at the moment, we’re unfortunately seeing many many businesses closing their doors. While all these closures have direct implications now on the ability to shop around now, it also has potentially worse implications for the future (whenever we return to better days) because we’ll have a reduced selection of businesses once the current cull is finished, but with people having more available spending money by then, we’re just going to be back to exactly where we were when “rip off Ireland” was at its height.

Such a reduced selection for consumer who have a bit more cash in hand will lead inevitably to increasing prices again – supply reduced, but increased demand – simple economics.

Wouldn’t it be nice if our National Consumer Agency spent some of their time doing some proper cause and effect analysis on why things are happening rather than trying to con us all by pretending they’re doing some useful work when all they’re doing is publishing the exact same survey results in two consecutive months.

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One Response to NCA survey results – Consumers are shopping around less. But why?

  1. valueireland March 1, 2010 at 11:11 #

    Even as I published this article this morning, I noticed that the Costa Coffee outlet on Dawson Street near where I work has closed down.

    It was there on Friday evening, and now this morning, it’s completely gone – all furniture removed, signs gone, and just a note on the window.

    That coffee shop was one of the busier in the area, but one less option for coffee/lunch now in the area.

    Sort of reinforces my points above – we as consumers can’t actually shop around any more when we don’t have the choices available to us.

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