Wednesday, August 15, 2018

Hurricanes Irma, María changed Puerto Rico consumers

By on June 12, 2018

SAN JUAN – A study commissioned by the Chamber of Food Marketing, Industry & Distribution (MIDA by its Spanish acronym), “2018 Consumer X-ray,” reflects that after hurricanes Irma and María passed, Puerto Rican consumers transformed their consumption habits, due to the fact that during the emergency they significantly increased the frequency of their visits to purchase food.

“The X-Ray shows us this year different consumers than we had seen in the last three years. Consumers who went through a process of transformation that led them to change their interests and priorities,” MIDA President Ricky Castro said.

According to the study carried out by IPSOS, a marketing research firm with more than 30 years’ experience, consumers claimed to visit the supermarket an average of 11 times a month, followed by bakeries, 6.5 times; 4.4 times at gas stations; and 2.2 times to the pharmacy.

In the case of supermarkets, this is more than double the average and was due to various factors such as the lack of electric power at home to store refrigerated products and the lack of merchandise at the establishments.

After the emergency, consumers seem to have kept some of these new habits. Compared with previous years, there is a considerable increase in the frequency of visits to establishments other than a supermarket to buy of food. One of them was cash-and-carries, which saw an increase of 0.28%, in 2017, to 0.36% this year.

The same was the case with pharmacies and gas stations, with the latter becoming an essential place to cover the need for gas, including for generators at home, and also supplemented with food during the emergency.

“Visiting gas stations became a necessity. The lack of electricity forced most Puerto Ricans to rely entirely on electric generators, whether gasoline or diesel, as a source of energy,” said Freddie Hernández, president of the Consumer X-ray Committee.

According to the data, after Hurricane Maria, the number of consumers with electric generators in their homes doubled from 21% to 41%.

As for total spending on food, the survey shows it remained mostly unchanged. However, distribution varied somewhat following a pattern similar to the frequency of visits. Although supermarkets remain the main food-purchase establishment, spending in them decreased slightly, from $261 in 2017 to $225 in 2018, with the difference going to other establishments.

As a result of the dearth of electric power service and the temporary exemption from the sales and use tax, restaurants reflected a significant increase in average weekly visits in Maria’s aftermath.

“Before the phenomenon, respondents said they visited these establishments twice a week on average. However, we see that during the emergency this number increased to almost four times,” Hernández added.

The average number of visits has normalized mainly due to the restoration of electric power service and the desire of 28% of consumers to save.

On the other hand, an important change in the factors that motivate consumers to choose one establishment over another was reflected. The three main reasons in years past, namely, proximity, shopper specials and regular prices, gave way to the variety criterion, which increased from 2% in 2017 to 11% in 2018.

“All these changes are related to the lack of items on aisles” since María, said Manuel Reyes Alfonso, executive vice president of MIDA.

According to Professional Market Research, the percentage of missing aisle products was 47% and is currently at around 20%. Normal levels fluctuate by 15%. This scenario has led consumers to prefer those businesses that have a more varied food offer.

Reyes added that this could have been a determining cause for three out of 10 consumers, or 29%, trying new product lines and brands during the emergency, which represented opportunities for new products and businesses.

According to the results, 35% of respondents said they stopped using certain products or brands, possibly because they were not available and consumers found substitutes.

This year, 66% of respondents said they had not cut spending on food purchases.

“We see that the number of people claiming to be making adjustments compared with this year has stopped and reversed. In 2017, 45% of respondents said they were making adjustments to their purchases. Currently, only one-third is taking these measures,” said Herbert Torres purchasing director of Econo Supermarkets.

One of the factors that could have influenced this behavior was the increase in funds granted to Nutritional Assistance Program (PAN) beneficiaries, who represent 51% of respondents and the majority of which confirmed they received additional federal aid starting in March.

The decline in a preference for savings coupons could be another factor that validates that Puerto Ricans are not reducing their spending on food.

“Although preference continues in the use of printed coupons, these saw a 15% drop, which indicates 49% of consumers do not prefer any type of savings coupons,” commented Mayreg Rodríguez, executive director of Select Supermarkets.

Consumers after María

The study also focused on learning about consumers’ behavior after María in other matters as well.

With regard to how prepared consumers are for the new hurricane season, 71% of those interviewed assured they were preparing before the start of the hurricane season, compared with 42% who said they had prepared before the 2017 hurricane season.

Another revealing fact is that 17% of respondents said they would be willing to leave the island, were another catastrophic event of the magnitude of Maria to re-occur. This represents about half a million residents.

“This information is extremely alarming because it would mean a significant decrease in the population, which can further aggravate the outmigration situation in Puerto Rico,” MIDA’s vice president said.

Among the other topics to be discussed when the study is presented are the relevance of printed or digital shopper, the effect of new e-commerce platforms, outstanding categories during the emergency, changes in consumers’ diets and healthcare.

The study will be presented in its entirety June 28, during MIDA’s annual event, which will be held for the first time at the Puerto Rico Convention Center.

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