The Credit Crunch Profiteers

By Yngve Fjermestad

We all know what state the current economic climate is in, and we all have to cut our costs, whether it is through travel, entertainment and yes even food. That last point is exactly what is causing me problems right now.

In the United Kingdom, the top four supermarkets are Tesco, ASDA, Sainsbury’s and Morrisons, all of these offer their own brands of food, usually with a three tier system as such: A luxury range, a normal range and a basics range, with the basics being the cheapest. Now any economist will tell you that in times of economic crisis people will have less spending money, and thus will opt for the cheaper options. The basic range is of course the cheaper option here, having been in financial trouble since before this whole “credit crunch” I am quite an expert on these goods.

Now I was surprised a few months ago that my 7 pence Sainsbury’s noodles had suddenly increased in price to 10 pence a 42% increase. Now this might not seem significant to you, but I can assure you it’s not exactly ideal when this happens to every product in their range. Another example, one of my small luxuries was ASDA orange ice lollies, of which I could buy a pack of 10 for less than a pound; quite recently this was changed to a pack of 8 for 1 pound flat.

For the big supermarkets this is simple economics, demand has gone up for the lower range goods, so they can easily increase prices by a few pence, which at such low prices is quite a significant percentage increase. This way the supermarkets maximise their profits without much loss in customers, because with all the big four doing this, the poor consumer does not have too much choice.

While this isn’t a problem for those who are simply encountering some temporary cash flow problems it has increased the cost of living for those already living on a budget. I am aware that we can vote with our feet here and chose to go to one of the no frills supermarkets such as Lidl, Aldi and Netto, but not all of us have this choice.

I’m sure this works exactly the same way in the US especially considering ASDA is a Wal-Mart Company. At the end of the day consumer choice should be the strongest vote, but with such a supermarket oligopoly there’s not much we can do. There is an obvious issue of business ethics here, but with most consumers not noticing the price increase, who's likely to complain?

From the Desk of a disgruntled consumer, Yngve Fjermestad