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Shoppers Embrace Quality Over Low Prices

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consumer goods
  • Shoppers Embrace Quality Over Low Prices

Shoppers now consider good quality and innovations over low price. They no longer compromise comfort for cheap items, writes TONIA ‘DIYAN.

In the past, the average shopper would go for products with low prices, but these days, good quality and innovations have become people’s main considerations. This trend, it appears, is attributable to convincing sales/promotions, well-stocked shelves and high-quality fresh products available. Therefore, to boost sales, as well as encourage shoppers, some retail shops launch attractive sales promos frequently.

Such promos, it was learnt, have worked for many shops over the years. According to retail experts: “Promotional offers are aimed at attracting more customers and enhancing sales. There are misconceptions that when discounts are offered by shops, such shops stock inferior products, that is why they sell at cheap rates just to do away with the so-called inferior products. It is not true.”

While factors relating to good quality, innovations and low prices are important determinants of where to shop and what to buy, retailers and manufacturers who offer good value, either through sales and promotions or via larger-economy packaging, stand to gain the most from hard-income-earning consumers in a tough economy such as Nigeria. That is why discount offers from some shops mean a lot to an average shopper.

Mr Todd Hale of Consumer & Shopper Insights, in a television interview, said: “For the economically challenged, low prices are a must, but convenience may trump low prices for some from discount retailers.

“For some shoppers, the value obtained from one-stop shopping can save them time and money. Therefore, manufacturers and retailers need to place a greater focus on shoppers’ benefits to achieve the differences that go beyond prices.”

Though price is a differentiator in any economy, store brand products, he said, must deliver a level of quality proportionate to their price points.

“Quality, at an affordable price, is what gets consumers to buy and repeat. If quality and value are lacking, then consumers will buy fewer store brands,” Hale said.

People no longer fancy cheap products; they prefer to buy products based on quality and the benefits such products have to offer. In the market today, there seems to be more new products than the old ones, especially for consumables such as canned foods which also come in sachet leaving the shopper with choices to make.

When reporters went round malls in Ikeja and Surulere, a large number of shoppers indicated their preference for quality and innovation over low price. Some others said they prefer innovation at low prices, and only a few of them said they prefer very low price not minding the value of the product.

Majority believe quality is not to be compromised; therefore while manufacturers are producing slightly low quality products, they should not forget to keep prices low as it is the least favoured option among consumers because raising prices is a strategy that consumers do not embrace. Consumers typically maintain reference prices for products based on prices they have seen or paid in the past.

A shopper, Mr Henry Nwanchukwu, said he prefers quality over low price.

“Low pricing could be deceptive; I am usually not deceived when I want to purchase an item. I make up my mind to go for quality so I can be sure of getting value for my money.”

Another shopper, Mr Okhiria Caleb, is of the view that good quality and innovation is better than low price if a person wants the best. “The life span of a quality product is longer than that of a cheap inferior product. You will only be buying what you need at once instead of buying the same thing twice because it is cheap,” he said.

Some people think the new products are either not trusted or they simply do not allow for patronage of the existing ones. May be because some people who will prefer to buy the new ones will want to explore them.

According to Mrs Kemi Badmus, a shop owner at Adeniran Ogunsanya Shopping Mall in Surulere, Lagos, bringing innovation into the market sometimes does not allow the sale of old products. “But if the new product is of a higher price than the already existing ones, then I am sure of selling my existing products. Therefore, innovations should be accompanied by low price, as it is generally known that low price is the driver of any shopper,” she said

Mrs Nsofor Chinwe prefers existing products. To her, existing products are better trusted.

She said: “I have come to trust existing products over the years. I can only be lured to buy newly introduced products if I can get a testimony from someone else about that product. Most times when I go shopping, I don’t check out new products, I simply pick the old names that I am used to.”

Some shoppers are of the view that new products should be discounted rather than sold at exorbitant prices so that people can be attracted to them.

A shopper, Mr. Stanley Omokaro, said discount offers should be attached to innovations so that shoppers can easily accept them when they are newly introduced into the market. “ It is only common with shoppers to want to buy new products at cheap rates. Some people would refuse to pay more or same amount as for an existing product for a newly introduced product,” Omokaro said.

Mr Odundayo Agboola is an economist. He prefers innovation to low price stating that the country’s poor economic condition is a major challenge to innovations. “My question is, will these innovations stay? Is our economy encouraging such? Modernism has been brought into production and now we get newly introduced good items. I believe that the newer a product, the better it is. Sometimes I get tired of the old product because some of them have reduced in quality. Therefore, I look forward to new products from time to time,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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