Puerto Rican consumers juggling budget to handle price hikes, product shortages
The Chamber of Marketing, Industry and Food Distribution’s (MIDA, in Spanish) most recent Consumer X-Ray shows a Puerto Rican consumer who is juggling their budget in the face of price hikes, product shortages and daily expenses.
The 29th edition of the study also shows that fluctuations in monthly spending on groceries reflect the greater influence of federal funds over the past year.
“The consumer recognizes that the pandemic has not ended, and we were able to learn their biggest concerns about the current situation, which are the increase in food prices (94%), the capacity to have enough money to pay for them (77%), the fear of contagion (72%), and the lack of products (76%),” Consumer X-Ray committee Chairman Richard Valdés.
“Faced with these concerns, the consumer has taken measures such as: cooking more at home (59%), storing products (50%) and avoiding food waste (44%), the latter being the most prominent between the ages of 25 to 44 years of age,” Valdés added.
Among the findings disclosed ahead of the full reveal of the study during MIDA’s upcoming convention Nov. 11-13 was that local consumers are spending an average of $407 on groceries per month, representing a slight decrease compared to 2020.
The study was conducted through house-to-house interviews with 1,350 people from the regions of San Juan, Ponce, Mayagüez, Arecibo, Bayamón, Carolina, Humacao and Guayama. It had a margin of error of 2.67 and a confidence level of 95%. The interviews were conducted between the months of July and August 2021.
This monthly expense reflects the consumer’s reality in “an atypical year” full of fluctuations such as price increases, shortages, transportation strikes, and federal aid, among others, said Valdés.
However, monthly spending reflected growth in some categories and decrease in others. Higher income segments ($50,000+) and ages 35-44 reflect higher monthly spending, the study revealed.
The interviews included people in the household responsible for grocery shopping, which revealed that 54% were women and 46% were men — who are increasing their participation in the activity, when compared to 24% in 2018.
Of the group surveyed, 49% are Nutritional Assistance Program (PAN, in Spanish) beneficiaries, which is in line with Puerto Rico Family Department data.
That group of consumers increasingly represents a growing number of the island’s population, with 1.3 million participants in February 2020, versus 1.5 million at present, according to Family Department’s Socio-Economic Development Administration data.
During the month of July, when the survey was taking place, PAN beneficiaries saw a reduction in their allocations.
“That could be seen as contradictory because the allocation of more than $900 million was announced on that date, but those funds are distributed over a period of more than one year. That’s why it’s important to see the federal contributions as they are distributed and not as they are announced,” said MIDA Executive Vice President Manuel Reyes-Alfonso.
Consumers store products in case of a shortage
Meanwhile, the study shows that consumers are stocking up on supplies and basic needs goods. This results in consumption peaks versus an increase in spending. Half of those surveyed confirmed that they were storing more household items, 46% of which is food.
“There is great concern, anxiety and fear for current shortages, so the consumer is keeping a supply of goods. It doesn’t matter if it’s rumors or truth, concern is created by current situations such as problems at the docks, transportation, truckers’ strike,” Valdés said.
Consumers willing to try new brands
The results of the study highlight the consumer’s attitude to change product brands and how willing they are to try new products.
“It’s worth noting that we’re facing a much more curious consumer. Two out of three people (66%) are willing to buy/try new products and brands,” said Valdés, adding that two reasons for a buyer to switch brands is if they find a better price and their preferred brand is not available. The majority, 90%, would stick with the new brand.
“All this can represent a risk of loss of customers for brands due to the high shortages on the shelf that are consistent due to the pandemic,” Reyes-Alfonso said.
Meanwhile, the study showed that the use of manufacturer discount coupons has dropped by 60%, which can be attributed to “a combination of factors, but possibly the publication of discount coupons and offers has been limited given the shortage of products and supply problems or because the retailer includes the offers automatically,” said Valdés.
For the first time, the Consumer X-Ray 2021 expanded its reach beyond Puerto Rico, to include interviews with the person in charge of grocery shopping in households in Argentina, Spain, Mexico, the Dominican Republic, and the US mainland.
“We were able to confirm that the Puerto Rican consumer is not alone, but faces crises very similar to the rest of the world,” said Diana Rodríguez, president of Lighthouse Strategies, the research firm that MIDA commissioned for the survey.
“For example, according to the respondent from Argentina, before they were scared by the events related to the pandemic, but now they’re used to it, a very similar scenario to what exists in Puerto Rico. In addition, the consumer is in an ongoing learning process in which they adopt new practices and become more demanding for services,” Rodríguez said.