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And, christel, i mjust wondering, are your members, the retailers, are they reporting the changes, any big changes in consumer behaviour due to the cost of living crisis? yes, indeed, consumer behaviour has changed quite significantly, and it has changed across the board. they re favouring long shelf life products like rice and pasta, they re looking out for promotions and they stock up when buying on promotions. they re looking for cheaper brands, some more budget line products, more private labels. they re investing a lot to help consumers and to cushion them from the worst of the crisis and inflation, the high prices. and, christel, what are your retailers saying about the outlook for prices? i mean, are more rises to come, do you think? well, the situation ....
So, there you go, that s the start of how prices get set. but how much does psychology play in the price that we pay for our shopping? well, my next guest has literally written the book on this. it s called the invisible game: the secrets and the science of winning minds and winning deals. kai markus mueller, a real pleasure having you on this show. and, kai, let s start with this. what are some of the tips and tricks that retailers use? well, there is a wealth of them in consumer psychology. but i ll tell you a few of them. a very, very, very strong component is, for example, the default effect. so, for example, if you have a subscription, it renews by default, and we have trouble thinking about the renewal, wejust let it go. then there are things like red signs for discounts. people have learned these things, over and over that red signs give you pleasure. ....
The costs low and how do they negotiate with their suppliers? well, to find out, i ve been speaking with the director general of eurocommerce. that s the organisation that represents retailers and wholesalers in 27 european countries. christel delberghe, a real pleasure having you on the show. and, christel, can we start with this? because as we ve been seeing the costs of raw materials heading higher, how much pressure are your members facing to keep the prices down? well, the pressure on retail is immense. today, inflation in europe is about 10% and inflation in groceries is i9%. and the pressure on retail is exerted via the higher cost of the goods for resale, the higher cost of operation. and they re facing consumers hit by a severe cost of living crisis. for them in the retail, the retailers have been able ....
But these retailers, they often have their own brands. i m just wondering, is that a big plus for them when negotiating? you know, in theory, you should have a chinese wall between your private label business and all the rest, in theory. but, you know, from one side, it can also help them to understand the reason why of price increase, because they have to buy raw materials, they have to buy coffee. they know very well that normally to give you the right dimension of a timing. when i order coffee today, it takes four months before it arrives in italy, and one month, two months before that we transform it and we distribute. so, even if the price tomorrow morning is going to go down 50%, we got six months of tailor that doesn t allow ....
People believe that they get a good deal, despite the fact that they are actually playing a game that is set by the company that sells these products. and, kai, i m wondering, do you think, you know, are consumers more likely to be accepting of rising pricesjust because of all the information about inflation that we re constantly hearing about? yes, absolutely. 0ur minds adapt very quickly to new situations. and a very important concept in that respect is anchoring. so, if i am getting used to high numbers, also my price perception goes up and i am more much more willing to accept high prices. however, one problem from the corporate perspective is that, if you train your consumers to become bargain hunters, it s very hard to retrain them to accept high prices. well, kai, economics would ....