A new report has revealed the extent to which consumers are fooled by false economies. Seven in 10 (70 per cent) consumers in the UK experience false economies with a fifth (20 per cent) falling victim at least once a month.
With false economies being so prevalent in the British consumer experience, the report says it’s no surprise the risk of being caught out adds up to a huge £3.8 billion, with a single false economy costing each consumer an average £103.70.
The research from TopCashback.co.uk, revealed that half (50 percent) of consumers are most likely to experience false economies in supermarkets. Food products and groceries are the false economies consumers succumb to the most often (31 percent).
However, it’s the big-ticket items including cars and holidays that leave consumers with the biggest holes in their pockets. One in 20 consumers (six percent) have since realised they have been duped when buying a car, costing them on average, £735, and one in 10 (11 percent) have paid out £307 on a holiday that turned out to be a false economy.
The predominant reason for buying into a false economy is a fear of missing out on a good deal (31 percent). Convenience (26 percent) and a lack of time (21 percent) are also among the most common reasons leading to consumers buying into false economies.
The research also reveals there is a numeracy skills gap with 16 percent of consumers being duped by false economies because they find it too difficult to work out the maths of the deal. The same number of consumers also feel deliberately tricked by retailers and providers.
Adam Bullock, UK Director at TopCashback.co.uk, said “Our research shows convenience and a lack of time are causing consumers to reach for products and services that turn out to be a false economy. But more worryingly, it’s a fear of missing out on a good deal causing the problem. Combined with people feeling confused or tricked by retailers’ offers, it’s proving too complicated to always find the best deal or true economies when shopping. This shows the importance of taking the time to research what a good deal is, rather than spontaneously investing in items.”
The size of the retailer or provider may also play a part as four in 10 (40 percent) consumers have been caught out at a larger chain shop and 29 percent fell victim in an independent shop.
However, consumers are less likely to experience false economies while shopping online. Just 24 percent have succumbed to a false economy with a major online retailer while independent online retailers (17 percent) and other online retail platforms (13 percent) also scored lower than shops on the high-street.
Bullock continued “Consumers may be experiencing false economies most often in supermarkets and larger chain stores because these are the places we tend to frequent the most. However, it could also be because it allows for less time for consumers to compare prices and research products. Online shopping gives consumers access to more resources, smaller independent retailers – which could offer cheaper prices – and a whole host of discount codes and cashback deals, which can help reduce prices.”
In a bid to save money, 83 percent of consumers buy own-brand products, 77 percent buy reduced items at the supermarket and 56 percent bulk-buy. However, these tactics do not always work out for consumers. Nearly a fifth (17 percent) of people say bulk buying is a false economy because it increases waste, while one in 10 (10 percent) think buying reduced items and own-brand products is a false economy because of poor quality.
However, of the ways in which consumers try to make savings when shopping, and those perceived to be fair economies, using a membership or loyalty card (82 percent) and shopping with a discount retailer (72 percent) save consumers the most money. Consumers estimate they save £49.90 and £72 respectively.