"The financial crisis has made us consume more rationally"
Juan Carlos Gzquez Abad
30/09/2014
ngela Plaza

Juan Carlos Gzquez Abad has a PhD in Business Administration and Management from the University of Almeria, where he currently holds the position of professor of Marketing and Market Research in the Department of Economics and Business. Gzquez was, in addition to Conference Chair, one of the speakers at the Advances in National Brands & Private Labels in Retailing (NB & PL) International Symposium organized in collaboration by the Ramn Areces Foundation, the UOC and the publisher Springer. As an expert in retailing, he gives us his opinion on the consumption of distributor brands in Spain, a growing trend in recent years, especially in the food sector.

Has the crisis led to an increase in the purchase of distributor brands, the so-called white brands, in Spain?

It probably has contributed to a rise in the sales of distributor brands, which the media incorrectly refer to as white brands. In my opinion, and after many studies and much research, I believe, especially in the case of Spain, it has coincided with the economic crisis. This has accelerated the process of improving the quality?price relationship of this type of products. However, in my opinion, in most cases, the distributor brands are not of as high a quality as the manufacturer brands, as these companies have very long histories, some over a century, and are experts at what they have been manufacturing for a very long time.

For many consumers, some distributor brands are better than the manufacturer brands. Aren?t we sometimes just paying more for the brand?

Years of experience lead to reliability and, of course, this is something you pay for. With a brand, you pay for their track record and everything the company has invested in research, development and innovation to improve the product.

But hasn?t this changed somewhat with the crisis? I mean people willing to pay more just for a particular brand.

Yes, this practice has been broken. Although I believe it was already being broken prior to the financial crisis. It's not that the crisis has helped; rather, it has forced many people to move to distributor brands and this move has created knowledge and a trend in consumption. The consumer has realised that these products weren't as bad as they thought.

Is there a stronger tradition of buying distributor brands in other European countries, such as Germany?

Germany is a bit of a special case because there is a strong presence of discount store chains. It is clearly a very different market to the Spanish one in terms of the traditional positioning of the distributor brands. However, distributor brands have a significant share of the market in Germany, approximately 44%, although this is lower than in Spain, close to 51%. In any case, if we look at the market share of distributor brands globally, there has been an increase in growth over the last 15-20 years, especially during the years of the crisis.

Could we say, then, that in this new financial context people are consuming more rationally and thoughtfully?

Yes, without a doubt. Having, unfortunately, a reduced budget for doing the shopping has made people opt for trying distributor brands, to give them a chance. On the other hand, and this is another line of investigation, in recent years, there has also been a new trend towards discount coupons and brochures, which are increasingly commonplace. This shows that the consumer is paying more attention to what they buy and how and where they buy it. They?re comparing prices more. You only have to see the number of websites for doing price comparisons, which has grown exponentially in recent years.

In this context of more responsible and rational consumption, do marketers need to find new ways of achieving client loyalty?

One way of continuing to sell is to do it at a lower price, which can help you position yourself in the market. It?s not a bad thing to position yourself according to price, but you need to find a market niche and make a space for yourself. For example, in some categories, many leading manufacturer brands have started to offer their products in packaging of the same size as usual but with a much smaller quantity of product at the price of one euro; a price which is labelled on the packaging so the consumer may think that these brands have reduced the price when this has not actually occurred.

The crisis has affected the price of many products but not luxury products. Why not?

In fact, they have increased a little, and it has helped reaffirm the behaviour of the consumers of these brands. Before, parts of the middle class could purchase certain products but now, with the new economic situation, the distance between the different statuses has grown and forced middle-class consumers to stop buying this type of products. The crisis has not affected the upper classes as much, and this has led to a change in the habits of middle-class consumers who have been pushed towards, in many product categories, lower-priced brands.

And what will happen when the crisis ends? Will consumers return to their old habits or stay loyal to the distributor brands?

This is the million-dollar question. In my opinion, the behaviour of many people will change, but others will stay with the distributor brand. They have seen that the quality is not bad, and they are used to it. A very paradigmatic case in Spain is toilet paper in which distributor brands occupy 83% of the market share. In fact, there are only eight manufacturer brands in the entire country. But while some people will continue buying them, others will not, and this will mean a drop in sales for chains with their own brands. These chains, which at the time took competition brands off their shelves, will not be able to reintroduce them, and they will have to search for new ways of maintaining their profits.

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