Is Brand Name Losing Its Cool?

That brand names cost more than own-brand or budget ranges is not news to anyone. That this discrepancy can sometimes be quite marked is no more of a shock to anyone who is paying attention. And yet there still seems to be a thirst for the big names among shoppers. However it seems that in the new world which has been born out of the global financial crisis, the numbers of people voting with their wallets and choosing the cheaper option are increasing. Are we finally coming to terms with the idea that all those brand names amount to very little in terms of tangible quality? Or are people simply deciding to tighten their belts temporarily?

Go to any supermarket today and you will see that people are spending longer in the aisles looking for the extra few cents’ saving than ever before. These same people two years ago may well have instantly picked up the recognisable brand name and dropped it in their trolley without so much as looking. What is going on? Obviously we are in a recession, but this time it feels very different. Almost without noticing, we have suddenly become thrifty. It seems strange to say it, but it has almost become cool to be careful.

It must be said that there are some cases where compromising on quality for the sake of price is less well-advised than in others. We can all think of a few ourselves, but suffice it to say that thrifty shopping can become a false economy when we buy the cheapest line possible and end up throwing it out because it was inedible or made us need to go to the bathroom non-stop for a day. Such a strategy is almost doomed to fail and can sour a person on the whole concept of economising. However, there are cases where dropping from top-of-the-range to mid-range constitutes very little difference.

It is no myth that in blind taste tests we will often see a mid-price item out-performing its more illustrious rivals. Perhaps more often the big name will win out, but this is to be expected. After all, reputations are built over time. The better ingredients cost more, and in cases where the mid price item is more or less copied from the bigger name, they can never get it absolutely right. As a result, the consumer will often pay for the name.

If, however, you are making a concerted effort to leave aside the added expense of buying brand names all the time, it cannot have escaped your attention that sometimes the supposed “lesser brands” can be a bargain. Sometimes too, there is so little difference between the big brand and the little one in terms of taste that it is only social conditioning making us buy the big names. It may not be for everyone, but next time you are at the supermarket throwing in the brands you have always bought, why not go downmarket? You might find that sometimes the bargain buys are very much to your taste.

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Financial Cynicism or Financial Skepticism?

Looking to the Future

Reading the financial pages of the newspapers – both national and international press – has become something of an endurance sport in the past 18 months. Although there have been serious issues in need of being addressed, there must also be some acknowledgement that at a certain point, bad financial news reaches a level of saturation that makes everyone reading want to bury their head in the sand and shout “no more!”. This presents financial editors with a tricky conundrum. You have to report what’s going on, but when all you seem to be reporting is one hammer blow after another, does a point arrive where the coverage begins to dictate behaviour?

There is now a great deal of cynicism when any politician says that they can see the green shoots of financial recovery. Of course, there tends to be some cynicism when any politician says anything these days. It has become de rigueur to simply disbelieve a politician by dint of their occupation. It would be tempting to assert, although one must accept that statistics do not exist to back this up, that were a prominent politician to stand up and declare that it was sunny outside, 25% of any audience would look out the window for definitive proof before trusting that it actually was. This is how politicians are viewed by the general public in almost every country. It may not be ideal, but that’s how things are.

So it becomes doubly hard for governments to persuade their electorate that financial recovery is on its way, or already here. When a populace will refuse to believe the word of a politician on principle, overcoming cynicism becomes a Herculean task. Is this how it should be? A little bit of skepticism is surely welcome, but at what stage does skepticism become deliberate contrariness? At what point do we say “the media are saying one thing, the government another – I can only trust my own judgement.”? It seems that in this case, there is no time like the present. To clarify that, we appear to be on the cusp of a recovery which may, initially, be accompanied by limited growth or none at all. Waiting for recovery with growth to take off could mean missing the best opportunities. Get on the right bus now, however, and there could be excellent payoffs when your stop comes along.

As much as we like to make our own judgements based on a commendable grasp of the information in front of us, it should be accepted that we live in a world without certainties. No-one ever got rich backing sure things, but the markets are beginning to rise. Investing at this point may be the wisest step, because once the recovery has clicked into top gear it could be too late. It may not work out the way you hoped it would, but the same is true of any investment at any time – unless you are illegally well-connected. Be cautious and suspicious by all means, but don’t let opportunity pass you by.

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Cash Isn’t Dead

The past few years have seen a major change in the way we do things financially. More and more, we are seeing an economy that works away from the traditional methods. It used to be the case that shoppers would pay for smaller purchases with cash, and for larger ones with either cash or check, and as time went on with credit cards. As time has passed, however, there are many people who do not bother carrying cash with them and the check is now about as fashionable as velour flares. More and more, we are becoming a society of people who pay with plastic. Our weekly shopping is paid for by handing over a small rectangle of plastic and the funds are taken from our account directly.

This is a system that has taken off in no small part due to its convenience. Don’t have time to get to the ATM and withdraw cash on your shopping trip? Just hand over the plastic. Not sure how much you need to withdraw? Plastic means that the only money to leave the account will be the money you spend in the store. It’s convenient and saves on thinking. Initially it seems that it is the perfect way to do things. But this system does have its drawbacks, and people are becoming more and more aware of these and returning to good old paper money. If anyone out there is  hoping for the day when cash is entirely replaced by plastic, they probably have some time to wait. Checks may be playing less and less of a part in personal finance, but notes are still going to be used for a while yet.

The reason for this is that cash does allow you to take far more of a pro-active role in managing your money. One thing that has made paying by plastic problematic for people is that it makes it altogether too easy to spend money without really noticing. When the wages hit your account on pay day, you have a certain amount of money for the rest of the month. Paying your bills cuts away a fair section of that money. After other necessities are taken care of, you have your disposable income. Now, you wouldn’t be cavalier with the bills and necessary payments – but paying by plastic makes it all too easy to spend your disposable income, and that has to last for the rest of the month.

By withdrawing your disposable income in cash it becomes a lot easier to keep an eye on how much you are spending. Sure, you want your money to earn interest, so open a savings account and put some money in there. The rest of your disposable income can be kept somewhere safe and accessed whenever you need it. If you are keen to stick to a budget, it becomes much easier when you can physically see what you have for spending. Your plastic does not show you a running total as you use it, so the benefits of cash are surely clear. No, cash isn’t dead. Not by a long shot.

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Canadians Still Paying More … But Not Much More

Canadian shoppers are used to something of a price difference between shopping domestically and journeying south of the border to pick up some purchases. For various reasons, the dollar goes further in the States even when taking into account the exchange rate, and this has been known to drive some Canadians to visit family in the States, just happening to do a lot of high-value shopping while there. But just recently this price gap has leveled considerably, according to a study carried out recently. It has not closed entirely by any means, but to see it narrowing is positive both for shoppers and for stores.

Of course, as with any financial story it isn’t just a matter of saying “things have improved to some extent” and leaving the statement there. There is considerably more to it, not least the fact that the findings of the study are contentious, having been opposed by the Consumers Association of Canada. The report itself was unveiled by Doug Porter, Deputy Chief Economist at BMO Capital Markets. In their study last year, BMO found an average price difference between selected products that stood in favor of the US shopper to the tune of eighteen per cent. This year, with the American economy having suffered severe blows, that gap has receded to 6.8 per cent.

Porter puts a lot of this narrowing down to the strengthening in the loonie, which has comparatively thrived while the US dollar has struggled. As the value of the loonie rises against its Southern counterpart, Canadians have comparably more buying power, and it is normal for prices to fall so that business does not go South.

Nonetheless it still depends very much on what your planned purchases are. For example, if you want to drop into Starbucks and enjoy a latte (tall, nonfat) then for the first time it is cheaper to do so on this side of the border. If you are buying a camera, expect to pay slightly more than your Southern neighbor, but only to the tune of about 2%, which is considerably less than once it was. However if you have your heart set on a chainsaw, you might be well advised to check import costs, as they are still 25% more expensive in Canada. Going to the US and bringing it back across the border might have its own problems, too.

Porter insists that this is a sign that Canada’s stronger anti-recession policies have made things better for the Canadian consumer. The Canadian consumer, represented by the Consumers Association of Canada for the purposes of this article, disagrees. Its president Bruce Cran states that there are huge disparities on a number of other products, not least magazines, which differ in price by a massive 28 per cent – double what the report says. The Association argues that as things stand, Canadian retailers are failing to pass on savings they have made importing US-made products to their customers. Nonetheless, the BMO posits that this will always be the case due to institutional differences, but that the gap is narrowing.

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