The idea of ‘low cost’ may have been born in the air but it has come down to earth now and has put down roots in the land of the consumer.
The low cost airlines proved to be a true revolution in the tourism sector and their example has spread. The economic crisis and changes in consumer habits have meant that the philosophy of getting more for less has become normal in everyday life and has conquered the sectors of food, clothing, telephone communications, leisure, real estate and even insurance. Malaga, with one of the highest levels of unemployment in the country, has become one of the provinces where this trend is most noticeable and it is marking a new way of life.
The latest sector to become incorporated in this phenomenon is that of pharmaceutics. Last week, the industry announced that there is to be a reduction in the price of medication; it has been obliged to do so by the Health authorities, because doctors now have to write prescriptions for the active ingredient instead of for the brand name of the product and pharmacists have to supply the cheapest brand of the medication unless the patient specifically requests another brand and is prepared to pay the extra cost.
This practice has existed in Andalucía for some time, but its extension throughout the rest of the country has led the laboratories to hit back. The strategy is always the same: if a brand is expensive and fewer patients are using it, the manufacturer looks for ways of gaining the maximum benefit from a larger number of clients, even though the overall earnings may be lower.
But is this just a temporary measure because of the purchasing power of families is lower nowadays? Jesús Burgos, of the Consumers Union of Malaga (UCE), says ‘low cost’ is here to stay. “New initiatives are coming into being which are forcing long-established shops to lower their prices”, he explains, while also pointing out that consumers are recovering some powers which they had lost. José Luis Sánchez, of the Facua consumers association of Malaga, agrees: “Prices have been abusive for a long time and clients are seeing that if they compare prices and look around, they can find alternatives and this is something which will not happen when the economic situation improves”.
Food & personal hygiene
Before the economic crisis, few families would stop buying their favourite brands in order to spend less on shopping, but necessity is obliging them to do so. The consumption of own-brand goods has increased considerably, as has that of distributor brands.
And not just on food. Personal hygiene and household cleaning has followed the same path. In Malaga, 39 per cent of consumers look for cheaper options for the products they use regularly, according to a survey by analysts Price Waterhouse-Coopers. However, this applies more to some products than others. Fruit juices, for example, where 44 per cent say they look for cheaper brands, cheeses (41.8 per cent) and milk (40.3 per cent). Own brands are now responsible for 28.6 per cent of the market share of food products, while the most economic brands have risen to 17.5 per cent and bargain offers to 22 per cent.
Those who fare worst, the leading brands, are launching loyalty campaigns to defend themselves and are lowering prices. Meanwhile, consumers have discovered that the savings do not mean a reduction in quality and are benefiting from a reduction of between 18 and 42 per cent in the amount they spend on food, 32.7 per cent on packaged products, 43.9 per cent on cleaning items and 10.8 per cent on personal hygiene goods.
Consumers are now becoming ‘smart shoppers’. “Consumers are more critical and selective now, as well as being better informed and knowing, for example, that behind many own label goods are trusted manufacturers”, says Jesús Burgos.
Until September, the low cost airlines which operate in Malaga gained 8.8 per cent more passengers than in the same period last year, according to data from the Institute of Tourism Studies (IET).
These companies have transported 3.2 million passengers via the passenger terminal of the Costa del Sol’s airport in the first nine months of this year, almost 80 per cent of the total number of passengers who arrive at this airport, when on a national level they account for only one half compared with traditional flights.
The Internet has contributed to the fall in prices, because it offers a global market in which consumers can find the best prices in pharmaceutical goods, clothing and travel.
These companies are able to offer very competitive prices because their overheads are minimal. A new online commerce law gives consumers greater protection and more people are choosing to shop this way