BROAD-BASED INCREASES in consumer prices are having a visible impact on consumer behaviour, reports YLE.
Hannu Krook, the chief executive of SOK Corporation, on Monday told the Finnish public broadcaster that consumers are presently swapping products for more affordable alternatives, favouring store-branded products and planning their shopping more carefully to reduce impulse purchases.
S Group, the parent organisation of SOK, has revealed that its operating result improved by 16 per cent year-on-year to 325 million euros in 2022. The improvement was driven especially by the recovery of its hotel and restaurant business, but the trend was the opposite for its grocery business, with the result falling 40 million euros from the previous year despite an up-tick in sales.
“Costs increased across the board last year, but we didn’t take all the cost increases to prices. That led to the drop in result,” explained Krook.
While the erosion of purchasing power has not had an impact on the product offering, it has begun to shape demand. Finnish consumers are buying less fruit and vegetables but more sweets – a typical development in times of economic uncertainty, according to him.
“Sweets are a cheap form of luxury for your daily life. The demand for them always seems to increase during a slowdown. The same phenomenon is visible in market cosmetics.”
Consumers are also “downgrading” within product categories: chicken consumption, for example, has not really decreased, but consumers are now preferring chicken wings over more expensive fillets.
Demand has declined particularly for products most affected by the price increases, such as coffee and salmon. The sales of fresh fish were 24 per cent and those of coffee four per cent lower in January 2023 than in January 2022.
“They’ve now both come down a bit from their peaks,” noted Krook.
Aleksi Teivainen – HT
