The high inflation rate in the Czech Republic is forcing most consumers to cut back on expenses in various ways. According to a recent survey conducted by Publicis Groupe, Czechs are mostly cutting back on unnecessary items such as restaurant visits, culture, and buying sweets.
However, when it comes to groceries, cosmetics, and fashion, they are switching to cheaper brands. The study shows that the percentage of consumers who have reduced their spending has increased from 51% to 65% between the first quarter of this year and the same period in the previous year.
Czechs continue to spend the least compared to other countries in Central Europe. In Slovakia, 69% of respondents said they reduced their expenses, while in Poland and Hungary, 75% and 80%, respectively. Poland is the only country where the proportion of consumers declaring a reduction in shopping expenses is still growing.
Among the specific items in the consumer basket, most people are cutting back on expenses in restaurants and bars (61%), sweets (58%), and fashion (56%). Meanwhile, more than half of the population (53%) is also cutting back on essential groceries. In contrast, the least amount of people are cutting back on expenses for pets (30%), savings (31%), and toys (35%), according to the study.
Furthermore, consumers are comparing prices and looking for discounts more than ever. According to the survey, a quarter of consumers have cut cultural spending, while 24% have cut expenses on restaurants and bars. Additionally, more than a fifth of people have cut expenses on vacations.
As a result, manufacturers of branded products are struggling to retain customers. Consumers are switching to cheaper alternatives, and brand loyalty is decreasing. According to a recent report by Nielsen, private label products in the Czech Republic now account for 28% of total retail sales, up from 22% five years ago.
The pandemic has also played a significant role in shifting consumer behavior, as many people have lost their jobs or seen a decrease in their income. This has forced them to be more cautious with their spending, and many have had to rely on savings to make ends meet. Additionally, the pandemic has increased online shopping, as more people buy products from e-commerce sites.
Due to the high inflation rate, Czech consumers are continuing to reduce their spending, particularly on non-essential items. They are also switching to cheaper brands and looking for discounts more than ever. The pandemic has played a significant role in this shift, as many people have lost their jobs or seen a decrease in their income. As a result, branded product manufacturers are struggling to retain customers, and private-label products are gaining popularity.