Street Talk
Expert Opinion
(sajjadbazaz@straight-talk-com)
World Consumer Rights Day was observed globally on March 15 to raise awareness about consumer protection and consumer rights. Even as the Day is observed to ensure that consumers are not exposed to commercial exploitation or injustice, the consumer’s rights continue to be compromised easily. Consumers raising voices against exploitation of their basic rights continue to fall on deaf ears. This continued exploitation is a growing concern and very little is being done to protect the consumers and respect their rights.
Today, the World Consumer Rights Day serves as one more reminder of unabated unfair trade practices which have pushed consumer segments to the wall. On one hand, the cost of living has gone considerably high and on the other, consumer spending is turning out to be an uncontrollable phenomenon. This situation has exposed consumers to a high-risk territory of price exploitation. Most of the time, this situation has put consumers at the receiving end. Precisely, unfair trade practices have become a norm.
Take the case of markets at airports. There is practice of selling the goods at higher rates – even two to three times more than the maximum retail price. Simple example is bottled water. Nobody cares when it is sold at twice the MRP. If one tries to show resistance against the overcharging, he is denied the product and a notion is given to the consumer that goods at the airport cost more than the normal rate. Ironically, the practice of overcharging of goods continues well under the nose of authorities at places like airports.
Sometimes it also happens that the manufacturer increases the price of a product and sells old stocks/products at new price rates. But this new price does not apply to the stock already with the retailer. And this is where retailers try to make a quick buck by trying to sell the old stock at the new revised rate. So, this is simply an unfair trade practice.
Changing Consumer Behavior
We all are aware that the Covid-19 pandemic, among other things, has brought consumers to the center stage and left a huge impact on consumer behavior. Now in post-Covid time we find consumer behavior not what we used to come across in pre-Covid times. If consumer surveys measuring pandemic impact are taken into account, we find the traditional economic wheel re-oiled and at the same time re-aligned to the new virus-induced normal. Today, we find a drastic change in spending and shopping patterns of the consumers.
The most visible change in the consumer market landscape is the use of e-commerce and other digital platforms. A vast percentage of consumers, particularly the millennial segment is click-happy to make online purchases. The online shopping trend is catching up fast among the consumers not because it’s convenient to make purchases while sitting at home, but because the discounts and other offers lure them to board the online shopping platforms. However, consumer behavior varies among different consumer segments.
So, the current scenario can be summed up that consumers are venturing out of their homes to go for discretionary as well as non-discretionary purchases through a mix of online and off-line channels. Here the main issue is the cost of making purchases. Are the consumers comfortable with the current pricing of items, be it essentials or non-essentials? I don’t think it needs a brainstorming session to arrive at an answer to this question. The unprecedented huge price rise of essential commodities and even non-discretionary items is one of the major onslaughts of the post-pandemic era which is proving deadlier than the coronavirus itself. Prices of day to day items such as tea, coffee, biscuits, toothpaste, electric components, etc. have witnessed unprecedented increase and the price hike continues almost every month.
The skyrocketing prices of essential commodities is contrary to the given situation where wage deflation and increasing joblessness have pushed (and continue to push) households into a distress situation. In fact, those essentially known as staple food items (potatoes & onions) of economically poor sections are fast getting out of reach of the kitchen budget of these households.
J&K Markets
In J&K markets, the price control mechanism has been thrown to the wind as traders and merchants stamp their own prices on the commodities to rob the consumers of their hard-earned money. It’s more ironic that none of us, as consumers, is vocal to resist the skyrocketing prices of essential commodities, be it grocery items, food grains or vegetables.
Let me explain. The rise and fall in prices have a lasting effect on the cost of living of the common man. Cost of living is the price of goods and services required for maintaining an average level standard of living and varies from place to place, and fluctuates from time to time. It has a direct bearing on the prosperity of an individual.
When the cost of living goes up, the social structure of a common man too takes a hit, exposing him more to complexes. As far as essential commodities are concerned, we have two categories. One is the traditional category of essentials and the second constitutes modern living essentials. The immediate impact of price rise is that it limits the access of common man only to necessities. Modern living essentials have become a luxury for him.
Normally, the price rise is attributed to the factors like rapid growth of population, increase in incomes, rising non-development expenditure of the government and increase in money supply, on the demand side. And on the supply side, inadequacy of agricultural output, inadequacy of industrial output and high-priced imports are listed in the price hike. But ours is a place where the hike in prices is not based on economics. It’s the writ of the supplier which runs, pricing the commodities arbitrarily. We as consumers are left with no option but to pay the illogical prices of the essentials as we have no other option.
The question remains-who will rescue consumers from the exploitation of traders and merchants who unlawfully hook inflation fears in pricing the essential commodities?
Meaningless Consumerism
What is the current scenario around consumerism? The landscape of consumerism has changed (and is still changing) a lot. Some two decades back, people used to hesitate to buy consumer goods which were not considered a necessity. Today, people lay hands on goods whether these things are actually needed by them or not.
With modern technology at the back, banks and financial institutions have been proactively capturing the profile of consumers and targeting them through emails, calls and messages offering pre-approved loan facilities. More importantly, a trend is in place where banks chase consumers with their loan schemes to fund their every purchase. These financial institutions and banks have loaded almost every family with a new norm of monthly equated instalments (EMIs) through their consumer loan offerings.
Here, this wave of consumer loans has taken the retail market by storm. People are granted on the spot loans at the time of their purchase. So, even if it is beyond their financial capacity, they are tempted to buy anything which is otherwise unimportant for them to possess.
Precisely, this easy lending scenario has got almost the whole generation into the net of the credit market. Mostly, availability of easy loan facility to lay hand on consumer goods and vehicles (two wheelers & cars) of their choice, has (and is) lured the employees who see these easy loans as a financial freedom at their doorstep to spend. Today, we have a large section of people who are now accustomed to owning consumer goods, cars and two-wheelers not purely on need basis, but they lay hands on them because some easy financial window offers a lending facility.
This indicates an immensely changed spending pattern not based on logic. For example, they frequently replace their consumer goods like television sets, mobile phone sets, refrigerators, washing machines etc. People have even become habitual of changing their cars and two-wheelers like any other ordinary gadget.
What are the precautions to be taken against meaningless consumerism?
In this consumer-centric economic scenario, there are certain important precautions which a consumer needs to observe while shopping. Normally, spending sees an upward trend when earnings go up. So, it makes sense to shop more when you are backed up sufficiently by your income. Entirely banking upon a loan with uncertain future income can result in debt trap.
In other words, spending is directly related to affordability. If you face any issue on the affordability front, better would be not to satiate your desires with loans. Experts have already expressed their worry over the fast-growing consumerism which is mostly luring consumers to meaningless spending – of course, mostly at the back of a consumer loan. The current scenario indicates that the rate of increase in income levels of most of the consumers is not matching their spending. By taking a route of loans, they simply push themselves at the edge of a debt trap and economic stress.
In nutshell, the best strategy would be to avoid being spendthrift: spend meaningfully while leaning at the back of a bank loan, make yourself habitual of saving more and also invest in safe sectors to multiply your wealth.
However, at the same time, taking a bank loan is not a bad idea if such a loan earns you sufficiently more than what it costs to service the loan. Here it makes sense to ask yourself certain questions before making a meaningful purchase. Is it really necessary to buy something just because you want it? Is it absolutely essential or something so useful for your everyday life?
How can one precisely challenge consumerism in the given scenario?
In the words of an economic expert, it is time to rethink your spending habits, rediscover thoughtfulness and intentionality in your purchases, and remind yourselves that happiness is not on sale at the department store. Buying more is not the solution. Consumerism is not a pathway to joy and meaning in life.
Mindless consumption always results in more stress, more burden, more pressure to impress, more envy, less financial freedom, less generosity and less contentment.
(The author is Editor-in-Chief, Straight Talk Communications. He is former Head of Corporate Communications & CSR Department and Internal Communications & Knowledge Management Department, J&K Bank)