Malaysian shoppers switch to cheaper house brands as inflation bites

An overwhelming 65.6 per cent of consumers said they are willing to pay more for quality, with freshness and convenience at 48.9 per cent and 30.3 per cent respectively. — Picture by Choo Choy May
An overwhelming 65.6 per cent of consumers said they are willing to pay more for quality, with freshness and convenience at 48.9 per cent and 30.3 per cent respectively. — Picture by Choo Choy May

KUALA LUMPUR, March 3 — Feeling the pinch of inflation, more Malaysians are opting for cheaper house brands to cope with their lower spending power, a survey has shown.

In a study of Malaysians’ spending habits last year, a whopping 40 per cent of the 873 shoppers surveyed said they bought more private-label brands than the previous year, with 67 per cent of them buying such house brands in individual categories of goods.

“The rise in inflation from 2013 (2.1 per cent) to 2014 (3 per cent) appears to have impacted those with an inconsistent or single income the most, as the money does not stretch as far as it used to.

“Given that a large proportion of a Malaysian household is spent on food, inflation may be pushing consumers to consider the cheaper private-label brands and to spend less on non-essentials,” market research firm Ipsos’ executive director for Malaysia, Katharine Davis said in a statement.

Private-labels are brands typically produced by manufacturers under contract for retailers such as hypermarkets, who then market and sell it under their own label.

According to the joint study by global market research firm Ipsos and survey solutions provider SSI, 53 per cent of shoppers who chose a private-label brand cited the lower prices as the main reason.

Its survey also showed 25 per cent of shoppers who felt that the quality of branded items and private-label items were the same; and 18 per cent who bought house brands despite the slightly lower quality, felt the lower price made up for the quality difference.

An overwhelming 65.6 per cent of consumers said they are willing to pay more for quality, with freshness and convenience at 48.9 per cent and 30.3 per cent respectively.

Only 14.3 per cent cited the price of items as their top concern.

Davis said that shoppers are ready to fork out more money in return for higher quality, but noted their willingness to remain loyal to branded goods may drop if a house brand is able to close the gap in quality.

“We inform our clients that their concerns about private-label brands should be directed at

consumers who perceive little difference in quality between the two. Our research shows that

people are willing to justify paying a premium for better quality products, but the more they

perceive less of a difference between the two, brands will start to struggle to keep their existing consumer base,” Davis said.

While some Malaysians tried to scale down on pricier branded items, there were also shoppers who were seen as spending more with over half or 56 per cent of saying that they had increased their expenditure when compared against 2013.

Slightly over a quarter or 27 per cent of those surveyed said their spending remained unchanged, while 13 per cent noted a drop in spending.

According to the same survey, 20.3 per cent of those with a monthly household income below RM1,500 noted a drop in spending, while those with part-time jobs and housewives who said the same stood at 21 per cent and 39.4 per cent respectively.

Conducted in October 2014, the study by Ipsos Malaysia & Singapore through SSI’s online survey polled 873 Malaysians and 966 Singaporeans from different ethnic groups.

The criteria for survey respondents are those aged between 18 to 65 and staying in Malaysia and Singapore.

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