Have we really put power in the consumer’s hands?   

Martin Hayward, former director of futures and strategy, dunnhumby doesn’t think so

Much has been written by many, including me, over the last few years about the transfer of power from companies to consumers, driven by freer access to markets, more competition, better information and ease of switching. Undeniably all these things have happened, but at a more prosaic level, it is useful to occasionally reflect upon whether the consumer’s life has really got better or has just become different.

Let’s take a couple of markets and consider the outcomes.

Air travel

On the face of it, the consumer has been the outright winner in a revolution of airline practices and fares.  There are more planes going to more places at generally cheaper fares than ever before.  On average, at a rational level, we can safely say, as Michael O’Leary of Ryanair often does, that the consumer has won.  However, there is a different side to the coin. The flight experience has undoubtedly got considerably worse - smaller seats, queuing to board, no refreshments, grumpier staff, less baggage allowance and so on...and if you need to book at short notice then the pricing strategy is best defined as rip-off.  Like many families I know, mine is determined never to fly on at least one of the carriers due to the way they’ve been treated and overall I have to say that the case for the consumer’s victory is some way from being proven.

Financial Services

Again there has undoubtedly been a revolution in the potential for consumers to manage their money between a dizzying array of providers and channels.  Choice has exploded and switching is easier if not yet seamless, but there are several major flaws in the market, still woefully unaddressed.  Firstly, most consumers do not have either the time, interest or skills to switch their money around the market to keep up with a decent rate and the financial services companies know this.  That’s why the market is dominated by short–term bonuses to attract funds in the sure knowledge that when the bonus disappears, the remaining derisory rate will be all that many are left with.  Pension schemes allow the man on the street to select from an awesome array of funds to invest in but frankly we’re all lambs to the slaughter here as we haven’t really got a clue how to choose.

Utilities

Or think about utilities, easier to switch, but which is cheapest, and for how long and which calling plan - it was estimated a while ago that to assess every combination of phone and price plan on offer in a typical mobile phone shop would take the best part of a month.

Groceries

Here the argument is more clear cut, but again we are still asking a lot of the consumer.  The choice and quality of food available is much better than it ever was but to really get the best prices what does it take – a fistful of coupons, loyalty card vouchers, a hawk-like ability to spot the deals between supermarkets and a photographic memory to know if that half price deal is real or just a sham reduction following a faux price increase a little earlier.

Make sure you’re not being too complacent in your assumptions that customers have never had it so good and that they should be grateful.  For engaged, smart consumers, with time on their hands there is undoubtedly a wonderful environment to wield their purchasing power and obtain brilliant products at brilliant prices, but for the vast majority in most markets, it is actually becoming harder and less fun to consume much of the time.

You may think they’ve never had it so good, and in theory, on average, that may be true, but looking at the total experience they may beg to differ.

Martin Hayward writes regularly on customers on our new blog