B. Mezgebu
31 December 2008
Addis Ababa — Recent studies in a couple or so of developed countries have given some hint of how consumer behavior is fast changing in those countries in the face of overall prices relentlessly moving north.
Basically these behavioral changes are coping mechanisms. Nevertheless every coping mechanism is not totally gloomy. The study pointed out that not everything goes down even in difficult times.
For a kickoff of the good examples the study points out maternity dresses. In several Western countries, the sale of these items is going up fast and by extension so are the sales of aphrodisiacs. I dare say people are giving each other close comfort. The newspaper, FT 29/30 2008 had an article which gave in detail several examples of what is selling well and not so well.
In these Western capitals, the most popular department stores right now seem to be budget stores. Underwear is selling very briskly, ostensibly mundane thing, but I fail to see why that should be so and the FT article doesn't do any better at explaining.
Cakes and "wooden gravestones" are having huge demand. I can see why cakes get snapped up, but don't exactly see why "wooden gravestones" are also doing well. The report shows too that physiotherapists are doing a heck of a job these days. That is not too difficult to explain: stressed-out workers need the kneading badly.
Fair-trade. You know the fair-trade of happier times when people went of their way to pay extra money in order to encourage products from poor countries or banana republics? Surprisingly people are still buying fair-trade. The explanation seems to be as someone put it, "Once people have seen the light about the importance of fair-trade, they never turn back". If true, that should put pessimists of the world to shame. Even capitalists have soft spots.
To your surprise maybe, holidays, short-duration holidays anyway, have not been affected at all. The explanation is that the more people feel they are being rocked by economic woes, the more they feel they need the change in the physical landscape; escape form alarming economic news and timeout from their bosses breathing down their necks.
And what are some of the things that people are not doing, or are eliminating? Credit cards for one; those are meant for better days; not for recession days.
Also people no longer shop until they drop. "Small durables" such as socks and clothes in general are now taken to be dispensable, or people are buying them less and less, thanks to needles and thread.
Can we assume that similar behavioral changes are happening to the Ethiopian consumers? If it is even remotely possible, which luxury goods are they reluctant to give up? In our case here, one must make sure what class one is talking about, as elsewhere of course, but more so here.
People below the poverty line are out. They do not have the luxury of choice. No further elimination is possible. The rich are also out; they have very little limitations. For simplicity sake, therefore, we take salaried people. With them too, the gaps are too wide to generalize. But for the lower rung of salaried men and women, the process of elimination must have been the only viable option. If one has been eating 3 meals a day, then make it two.
'Even for many middle class people, the places they may have patronized (restaurants, hotels, etc.) when prices were far lower than the stratospheric level that they now occupy, are becoming just fond memories of the recent past. I for one, avoid catering places with any "star" attached to them as if they are radioactive.
It is feared that one permanent legacy of the current bout of inflation in the country could be cost hikes that become a permanent fixture. This is because there is this fact of price inelasticity. I don't know about rich countries, but our experience so far is that once prices go up, they rarely come down; even if the situation that created the price increase in the first place no longer exists. We hope this present one will prove an aberration of past trends.
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