When Catherine Watt's husband started balking at the price he was paying for Schick razor blades, she decided to do something.
Ms. Watt began gathering coupons, requesting free samples and searching for bargains. She now has a bin of razor blades in the couple's home in Oshawa, Ont. “My husband never has to buy another razor,” she said.
Ms. Watt has used the same strategy to stock up on shampoo, dog food, frozen food, T-shirts and even baby formula. Her freezer is packed so tight she won't be buying much of anything for a long time.
Many consumers hit hard by the recession are responding in the same way, being extra careful about their purchases and using up what they have at home before replenishing their pantries.
So-called “destocking” by consumers and retailers, who don't want to carry high-priced brand names, is starting to hit the bottom line of many companies.
Thursday, Kimberly-Clark Corp., KMB-N which makes Huggies diapers and Kleenex tissue, said it is cutting 1,600 jobs or roughly 3 per cent of its work force because of slumping sales of its brand-name products. Procter & Gamble Co. PG-N is facing similar pressures and recently came out with lower-priced versions of Bounty paper towels and Charmin toilet paper, as well as a lower-cost line of diapers, Luvs.
“What Kimberly-Clark is seeing is that even the average consumer is really looking at the prices when they are at the store,” said Kimberley Clancy, who lives in Oakville, Ont., and runs a website called frugalshopper.ca.
Ms. Clancy said many shoppers are drawing on their reserves and are being extra careful about what they buy.
“When you look at how much you have in your freezer and how much you have in your cupboard, people are just wasting less,” she said.
“Instead of just grabbing a package of toilet paper, they are actually looking and saying how much am I paying?” Ms. Clancy said.
Other companies, including confectionery giant Cadbury PLC, CBY-N drink maker Diageo PLC DEO-N and food conglomerate Unilever NV, UN-N are also scrambling to come out with products to entice consumers back. Even sheep farmers in New Zealand are worried and have banded together to join an online wool shop that encourages shoppers not to abandon wool products for synthetic versions.
William McComb, chief executive officer of Liz Claiborne Inc., LIZ-N calls the phenomenon the “savvy shopper syndrome”.
“It's not a matter of what can [a consumer] afford to spend, it's what's the price that she can get it at,” Mr. McComb said at a recent retail conference.
“And that's something that just emerged out of nowhere,” he added.
Sales of private label products are also soaring, putting more pressure on brand-name makers to cut prices or spend heavily on marketing.
Retailers are also slashing the number of brand names they carry in order to make room for their own varieties.
This week, U.S. grocery store giant Kroger Co. KR-N reported a 13-per-cent increase in quarterly profit thanks mainly to a big jump in sales of its private label offerings.
“I would say that it's the responsibility of the big brands to get ahead of the curve and think pro-actively,” said John Malmstrom, a former advertising executive from Los Angeles who now lives in Bear River, N.S., and runs a website with his wife Susan called “planet cheapskate,” which helps people find deals.
The attitude of consumers has changed “from an environment of conspicuous consumption almost to an environment of conspicuous conservation.”
Ms. Watt, who has her own website called frugal-freebies.com, says her local grocery store has moved almost completely toward private label products and she welcomes the switch.
“I've always been prudent,” she said.
“But now if I see a sale on I say, ‘Wait a minute, I've got a coupon for that.'”
